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November 20, 2012
Investor Networks Urge Governments to Face Climate Change
by Robert Kropp
With Hurricane Sandy behind us, and another international climate change conference coming up in
Qatar, seven of the world's largest investor networks form the Global Investor Coalition on Climate
Change and call for an investment-friendly approach to climate change.
Did Hurricane Sandy help force the response to climate change to a tipping point?
Fullerton of the Capital
Institute thinks it's possible. "Systems scientists know that Sandy and the historic drought
that preceded it are mere symptoms of a systems design failure," he wrote recently. "That is, an
economic system design failure, a system designed for a set of circumstances that applied in the
past – huge planet, small economy, abundant resources, unlimited waste sinks – but are no longer
relevant. The context has shifted."
"This time really is different," he continued.
Seven of the world's largest investor networks—the European Institutional Investors
Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR), the
Australia/New Zealand Investor Group on Climate Change (IGCC), the Asia Investor Group on Climate
Change (AIGCC) and the United Nations Environment Programme Finance Initiative (UNEP FI)—agree with
Fullerton. "The re-election of President Obama in the United States, the leadership transition in
China and the upcoming gathering of policy makers in Doha for the UN climate change conference
provide an opportunity for investors and governments to begin a new dialogue on climate change and
to advance the ambitious policies necessary to substantially reduce emissions and mitigate their
potential impact on the world," they stated.
But in a letter to the
governments of the world's largest economies, the investor networks warn, "Current policies are
insufficient to avert serious and dangerous impacts from climate change. Further delay in
implementing adequately ambitious climate and clean energy policy will increase investment risk for
institutional investors and jeopardize the investments and retirement savings of millions of
Announcing the formation of the Global Investor Coalition on Climate Change
(GIC) to help support the interests of investors, the networks laid out the steps necessary for
governments to respond to climate change in a meaningful way. In addition to coming to a binding
international agreement—the upcoming Doha Climate Change Conference
should provide insight into the resolve of governments on the issue—the investors call for policies
that support low-carbon investment and an end to subsidizing fossil fuel industries.
advance of the international climate change conference held in Copenhagen in 2009, the United
Nations' Principles for
Responsible Investment (PRI) observed, "At least 80% to 85% of the finance and capital required
in our collective response to the mitigation and adaptation needs of climate change will come from
private investment sources and capital markets."
In order that climate change and clean
energy policies be designed to attract investment, the investor networks recommend that governments
consider the following measures:
• Include clear short term (2015), medium term (2020–2025)
and long-term (2030–2050) greenhouse gas emission reduction objectives and targets, and
comprehensive, enforceable legal mechanisms and timelines for delivering on these objectives and
• provide incentives to shift the risk reward balance in favor of low carbon
• encourage large-scale investments in low-carbon solutions, recognizing that
scale is critical to making low-carbon investment opportunities more cost-effective than
• align policies with investment life-cycles, which can be as long
as a decade or more;
• harness the power of markets to find the least costly ways to reduce
• align climate change policies with wider policy goals including
economic, energy, resources and transport policy objectives.
"While we commend governments
that have implemented supportive policy, much further work is needed to decarbonize economies and
portfolios and to stimulate private investment in low-carbon solutions," the letter concluded. "We
urge the world’s largest economies to enter into a new dialogue with investors…and hasten the
transition to a low-carbon economy."
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