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Investors Representing $13 Trillion Call for Climate Action Now

NEW YORK, New York, January 14, 2010 (ENS) – The world’s largest investors today issued a statement calling on the United States and other governments to “act now to catalyze development of a low-carbon economy and to attract the vast amount of private capital necessary for such a transformation.”

The U.S., European and Australian investor groups, who together represent $13 trillion in assets, called for “a price on carbon emissions” and “well-designed carbon markets” to provide “a cost-effective way of achieving emissions reductions.”

Investors urge governments to address the risks of climate change. (Photo courtesy Ceres)

The statement was announced at the Investor Summit on Climate Risk, a meeting of 450 global investors at the United Nations that includes U.S. Special Envoy for Climate Change Todd Stern, billionaire investor George Soros and former Vice President Al Gore.

The investors said while some progress towards a global agreement limiting greenhouse gas emissions was made at the UN climate summit in Copenhagen in December 2009, “we cannot wait for a global treaty.”

“Policymakers made only incremental progress in Copenhagen, leaving a great deal of work to be done to address the risks that climate change presents to the global economy and to investments,” they said.

They said, “we underscore the importance of concluding a legally-binding agreement this year with comprehensive long-term measures for mitigation, forest protection, adaptation, finance, and technology transfer, including a global emission reduction target of 50-85% by 2050, consistent with estimates from the Intergovernmental Panel on Climate Change.”

“Though we are sobered by how much still remains to be done after Copenhagen, we nevertheless are encouraged by the incremental progress made,” the investors said.

“Achieving some level of commitment from the United States, China, and India is a crucial and unprecedented step, and we urge nations to submit ambitious greenhouse gas emission reduction commitments as part of the Copenhagen Accord before the end of this month.”

The Copenhagen Accord is an agreement drawn up by heads of government from the United States, China, India, Brazil and South Africa that was recognized by the Parties to the UN Framework Convention on Climate Change at the Copenhagen summit, but it is not a global climate treaty.

U.S. climate envoy Todd Stern at the Copenhagen summit. (Photo courtesy ENB)

U.S. climate official Stern told the investors meeting today, “The Copenhagen Accord and a global treaty are not at odds, but can work together to get the job done.”

The investors said today that the commitment in Copenhagen by developed countries to provide billions of dollars in financing for developing countries to cope with climate change “represents an important start.”

“Some 85 percent of the financial resources needed to cope with climate challenges must come from private sources. In effect, the battle over climate change will be won – or lost – in the hands of private investors,” said Bjarne Graven Larsen, CIO of ATP, Denmark’s largest institutional investor.

“In order to play this role effectively, strong, stable and credible policy frameworks are crucial,” Larsen said. “We are waiting for policymakers to deliver.”

“Investors are poised and ready to scale up investments in building the low carbon economy, but without policies that create a stable investment environment our hands are tied,” said Anne Stausboll, chief executive officer of the California Public Employees Retirement System (CalPERS), America’s largest public pension fund with more than $205 billion in assets.

Anne Stausboll (Photo courtesy CalPERS)

“U.S. leadership is critical in this regard, including U.S. Senate action to limit and put a price on carbon emissions,” Stausboll said.

“What investors need most from national and state legislatures are transparency, longevity and certainty,” said Kevin Parker, global head of Deutsche Asset Management and member of Deutsche Bank’s Group Executive Committee.

“Until the U.S. Congress passes climate regulation, America will be at a competitive disadvantage in the development of renewable energy and other climate change industries,” he said.

The Investor Statement on Catalyzing Investment in a Low-Carbon Economy was endorsed by four groups representing more than 190 investors – the Investor Network on Climate Risk, Institutional Investors Group on Climate Change, IIGCC, the Investor Group on Climate Change, and the United Nations Environment Programme Finance Initiative.

“Given that Copenhagen was a missed opportunity to create one fully functional international carbon market, it is more important than ever that individual governments implement regional and domestic policy change to stimulate the creation of a low carbon economy,” said Peter Dunsombe, chairman of the IIGCC, a network of European investors.

“Time is of the essence and world leaders from both developed and developing countries need to act now to compensate for the lack of progress at an international level,” he said.

In their statement, the investors observed that the costs of action to reduce greenhouse gas emissions are “both affordable and significantly lower than the costs of inaction,” but said developing a global low-carbon economy will require “substantially increased levels of investment from the private sector.”

The UNFCCC Secretariat estimates that more than $200 billion in total additional investment capital for mitigation is required each year by 2030 just to return greenhouse gases to their current levels by then.

The International Energy Agency estimates that additional investment of $10.5 trillion is needed globally in just the energy sector from 2010-2030 to stabilize atmospheric concentrations of greenhouse gases at around 450 parts per million, the investors noted.

Mindy Lubber (Photo courtesy Ceres)

“This equates to roughly 0.1% of the total value of world financial assets and approximately 0.23% of the total value of debt and equity securities, so this is certainly an achievable level of investment – and one that would yield returns in terms of energy savings, energy security, reduced capital expenditures for pollution control, and avoided climate damages,” they said. “But it is also well above current investment levels.”

“As powerful as these investors are, they can’t underwrite a clean energy transformation at the critical scale needed without clear rules only government can provide,” said Mindy Lubber, president of Ceres, a U.S. coalition of investors and environmental groups, and director of the Investor Network on Climate Risk.

“Government policy can make clean energy cost-competitive by leveling the playing field with fossil fuels,” Lubber said. “Only government policy provides the long-term certainty that can turbo-charge private investment in clean energy, address the climate change threat and protect our planet.”

Click here to download the Investor Statement on Catalyzing Investment in a Low-Carbon Economy.

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