Investor Summit on Climate Risk endorses ‘green standards’ and clean technology in investment decisions.

Following on the heels of the ‘carbon principles’ put forward by Wall Street’s largest bankers, and some individual State governments developing policies to curb carbon emissions, it seems that the floodgates have finally opened and companies are now leading where some governments are fearful of treading.

The Investor Summit on Climate Risk, co-hosted by the United Nations Foundation, Ceres and the United Nations Fund for International Partnerships, was attended by nearly 50 leading United States and European institutional investors and by over 450 investors, financial and corporate leaders from around the world. At a press conference, they released a climate change action plan pledging to collectively invest $10 billion in clean technology opportunities over the next two years and to incorporate “green standards” into their investment decisions. The signatories to the action plan included state treasures, controllers, pension fund leaders, asset managers and foundations, collectively managing over $1.75 trillion in assets. An investor group covering Australia and New Zealand provided support, as well as Japanese non-governmental organizations and investors.

The President of Ceres and Director of Investor Network on Climate Risk Mindy S. Lubber, told correspondents that the action plan reflected numerous investment opportunities that existed today, while also seeking to put a dent in global warming and pollution, increase profits and benefit the global economy. It was about boosting investments in energy efficiency and clean technologies. It also required tougher scrutiny and analysis of carbon-intensive investments that could pose long-term financial risks.

In addition, Terry Macalister of the Guardian reports that some of the largest institutional investors in the world called on the US Congress to introduce a mandatory national policy to reduce greenhouse gas emissions by up to 90% below 1990 levels by 2050. The group of 40 investors, which includes F&C Asset Management in London and controls $1.5tr (£760bn) worth of funds, also wants the financial regulator, the US Securities and Exchange Commission (SEC), to insist that companies listed in New York and elsewhere disclose their exposure to climate change risk.

Macalister reports that the investment houses, are demanding that equity analysts and ratings agencies calculate the potential carbon costs for companies such as Shell, BP and electricity utilities which are involved in polluting activities such as producing oil from tar sands and operating coal-fired power stations.

In spite of some of the world’s governments being reluctant to sign up to greenhouse emissions targets, the effect these will have over potential profits when eventually they are introduced, has led companies and institutions to take a pragmatic stance and introduce carbon policies of their own. Earlier this month we saw the stunning introduction of due diligence procedures by Citigroup, J.P Morgan Chase and Morgan Stanley (see previous post 6 Feb 2008) for investment into coal power plants. Then there was the Bank of America putting a cost on carbon in the terms of their loans. “These really were huge changes that could be largely attributed to the questions posed by institutional investors,” said Mindy S. Lubber.

It really seems then, that there is an economic tipping point and that change is happening whether governments choose to act or not.


~ by abstraktbiblos on Saturday, 16 February, 2008.

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