Climate policy certainty is required by investors

November 20, 2008 at 11:43 am | Posted in Climate change, Environment, Global warming | Leave a comment
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The investor perspective on climate change is clear: policy uncertainty needs to be eliminated as quickly as possible.

According to a joint statement released on 11 November 2008 by the Institutional Investors Group on Climate Change (IIGCC) and the Investor Network on Climate Risk, as well as the Investor Group on Climate Change Australia/New Zealand (IGCC) :

Investors have a critical role to play in responding to the climate change challenge. Private capital is essential to achieving the transformation to a low-carbon economy and for contributing to the delivery of mitigation and adaptation measures. Through the allocation of capital, and by engaging with companies in our portfolios, investors can influence how companies respond to climate change. It is therefore critical that policymakers understand how climate change-related public policy will influence investment decisions.

This document sets out the investor perspective on climate change and the key elements of a global agreement that will drive the financial flows necessary to address climate change. …

Here’s the full text:

Investor Statement on a Global Agreement on Climate Change

According to this press release, the Swiss Foundation for Sustainable Development, Ethos, joined over

“135 leading investors, representing assets worth 6.4 trillion USD, in a statement to world leaders warning that any global agreement on climate change must be strong and binding to guarantee necessary financing for global emissions reduction and adaptation efforts, and that the financial crisis should not delay efforts to address rising global temperatures.”

That is trillion, with a ‘t’.

Scientists like Steve Schneider keep banging the drum—and rightly so—about the need for us all to think about climate change in terms of risk, not certainty.

Policymakers who still hold tight onto mental roadblocks such as “waiting for the science to be settled before …” they make decisions about climate policy are holding the whole world hostage to their own fears without realising the need for speed (while greed may indeed offer a free blindfold or choice of traditional blinkers).

The investors’ statement addresses the extent and the urgency of the situation up front:

Why investors care about climate change

Investors care about climate change and climate policy, because these will have an impact on the global economy as well as on individual assets.

As global institutional investors, we manage diversified portfolios that invest in a cross section of companies, sectors and markets. Therefore, we are concerned with the overall economic costs of climate change. Leading studies indicate that the economic costs from climate change will increase the longer the world waits to take action1, and any delay in reducing emissions significantly increases the risk of more severe climate impacts as it locks in more carbon-intensive infrastructure and development pathways2.

So next time you hear “Money talks” or “Follow the money”, just remember that 6.4 trillion USD in managed assets depends on your ability to create certainty in uncertain times, please, dear climate policymakers.  That is where you can actually add value  ;-)

1. Based on the Stern Review of the Economics of Climate Change, 30 October 2006 

2. According to the 4th Assessment Report of the IPCC, 2007

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