Build low-carbon economy now, urge world's top investors

For all the hand-wringing over the “death” of a low-carbon economy and the overwrought criticism of government spending on clean energy, sustainable technologies and strategies enjoy public support that’s not only widespread but growing.

And, believe it or not, there’s some big money behind that support, too.

To bring that message home, three climate-focused investor groups put out a statement today urging governments and policy-makers to take “new and meaningful steps in the fight against climate change.” Together, those groups — the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Investors Group on Climate Change (IGCC) in Australia and New Zealand — include 285 investors representing more than $20 trillion in assets.

The statement, which sets out recommendations for both domestic and international policies, concludes:

“Investment-grade climate change and clean energy policy will provide substantial economic benefits. Those countries that succeed in attracting private capital into low-carbon growth areas such as cleaner and renewable energy, energy efficiency and decarbonisation will enjoy multiple benefits, including new jobs, new businesses, new research and technology innovation, more resilient and secure energy systems and, ultimately, more sustainable economies.

“Private investment can and must play a critical role in addressing the risks and opportunities posed by climate change. However, private sector investment will only flow at the scale and pace necessary if it is supported by clear, credible and long-term domestic and international policy frameworks — ‘investment-grade climate change and energy policies’ — that shift the balance in favor of low-carbon investment opportunities.”

Also signing on to the statement were the United Nations Environment Programme Finance Initiative (UNEP FI) and the Advisory Council of the Principles for Responsible Investment (PRI).

“Climate change will transform economies throughout the world, creating new opportunities for investors,” said Wolfgang Engshuber, chair of the Advisory Council of PRI. “However, these will gain traction only if governments play their part in laying down well-designed and effective climate change policies. Without such a supportive regulatory environment, we will not see the level of investment that is needed to transform the world’s energy supplies and transport systems.”

The level of backing behind the statement indicates just how much support for a greener economy has grown, despite the ongoing economic weakness. A similar pronouncement issued in November 2008 represented just 150 investors with less than half the assets ($9 trillion).

Sent to the G20 and other governments in advance of the United Nations Framework Convention on Climate Change starting in Durban, South Africa, late next month, the statement recommends the following:

• Governments should define clear short-, medium- and long-term greenhouse gas emission goals and targets, along with comprehensive and enforceable legal mechanisms and timelines.
• Lasting financial incentives should be created that shift the risk-reward balance in favor of low-carbon assets.
• Lasting and comprehensive policies need to be designed to accelerate the deployment of energy efficiency, cleaner energy, renewable energy, green buildings, clean vehicles and fuels, among others.
• Governments worldwide need to keep working toward a binding international climate change treaty that includes all major emitters and sets short-, mid- and long-term greenhouse gas emission reduction targets.
• Leaders need to support the development of the Green Climate Fund and other comparable funding mechanisms.
• Governments need to speed up their efforts to reduce emissions from deforestation and forest degradation.

“The type of smart finance we are calling for, one that clears the way for the low-carbon economy’s vast business opportunities, could prompt the reversal of the current climate of economic insecurity,” said Paul Clements Hunt, head of UNEP FI. “It holds the potential to act as a major driver of growth and job creation.”