Global Institutional Investors’ Coalition Joins Calls for an Ambitious Post-Kyoto Climate Deal
Ahead of this week’s UN Secretary General’s Climate Summit 2014, a coalition of more than 340 global institutional investors representing $24 trillion dollars worth of assets has added their voice to the growing call for a progressive post-Kyoto Climate deal during the COP21 to be held in Paris, France in 2015. In a press release on September 18th, the coalition called on governments to provide a “stable and economically meaningful carbon pricing as well as phase out subsidies for fossil fuels.”
Although investors have long been drawn into the climate change debate (e.g. 2012 Investor Summit on Climate Risk and Energy Solutions) and their voices continue to form part of the climate change discourse, this is a significant step forward considering that it comes only days before the heads of state summit at the UN on September 24th. The fact that the coalition represents the largest investors in the globe and it has officially recognized that climate change is a risk to investment is of great significance moving forward. Their call adds on to the pressure on world governments to reach an agreement on how best to tackle climate change. The agreement envisioned is one that recognizes the essence of economic wellbeing and climate stability to the present and future generations.
Aside from the press statement, the coalition also released a report in which they stipulate actions already being taken by investors around the globe to tackle climate change while striving to guarantee economic wellbeing. Some of those actions outlined in the report are outlined below:
• Danish pension fund PKA looking to increase its new and existing offshore wind farm investments to €1.5 billion by the end of 2015.
• U.S. insurer and pension fund provider TIAA-CREFF reduces the carbon footprint of its real estate portfolio by 17 percent, cutting 58,000 metric tons of greenhouse gas emissions.
• Swedish pension fund AP4 is committed to decarbonizing its entire $20 billion listed equities portfolio.
• China Utility-Based Energy Efficiency Finance Program provides loans worth $790 million, financing 226 projects and reducing emissions by 19 million metric tons of carbon.
• ASN Bank in the Netherlands to become fully carbon-neutral by 2030.
• Zurich Insurance Group to invest up to $2 billion in green bonds, one of many commitments this year that has resulted in 20-fold growth in green bond market since 2012.
• HSBC Armenia partners with IFC to finance nine small-medium size enterprise energy efficiency projects in Armenia, totaling approximately $25 million and reducing carbon emissions by more than 6,600 tons per year.
• Global bank ING has in 7 years reduced its energy project loan allocation to coal power from 63 to 13% and increased its allocation to renewable energies from 5 to 39 percent.
Additionally, the coalition of investors launched the Low Carbon Investment Registry, a public online database of select low carbon investments made by asset owners such as pension funds and insurance companies. The registry reveals how institutional investors are directing capital towards low carbon assets.
It is noteworthy that all these initiatives followed the Global Commission on the Economy and Climate Change’s “The New Climate Economy” report, which highlights climate change risks to the economy and suggests that the next 15 years is crucial in putting the world on a path towards sustainable and low carbon development.