For the first time, dozens of institutional investors managing four trillion dollars in assets today called on US lawmakers to enact strong federal legislation to curb the pollution causing global climate change. Joined by a dozen leading US companies, the investor group outlined the business and economic rationale for climate action as they called for a national policy that reduces greenhouse gas emissions consistent with targets scientists say are needed to avoid the dangerous impacts of global warming.
The group, organized by Ceres and the Investor Network on Climate Risk, issued a Climate Call to Action at a press conference today in Washington DC. The 65 signers include institutional investors and asset managers such as Merrill Lynch, Allianz and the California Public Employees Retirement System (CalPERS), as well as leading corporations such as BP America, PG&E, DuPont, Alcoa, Sun Microsystems and National Grid.
Allianz among companies calling on US Congress
Uncertainty may undermine competitiveness
In endorsing the statement, investors and companies sent a strong message that climate policy uncertainty and the lack of federal regulations may be undermining their long-term competitiveness because it is preventing them from investing in clean energy and climate-friendly technologies and practices.
"Global warming presents enormous risks and opportunities for US businesses and investors," said Fred R. Buenrostro, chief executive officer at CalPERS, the country’s largest public pension fund with 230 billion US dollars in assets. "To tap American ingenuity and drive business to a leadership position in the low-carbon future, we need regulations to enable the markets to deploy capital and spur innovation."
Price tag on carbon essential
"Investors and companies are asking Washington to set a clear policy direction to address the risks of climate change," said Ceres president Mindy S. Lubber, whose organization also directs the Investor Network on Climate Risk. "The greatest climate risk facing investors and business is the uncertainty caused by the absence of US policy."
"Allianz SE believes it is essential to put a price tag on carbon, thereby enabling market mechanisms to drive emissions reductions and climate protection," said Joachim Faber, member of the Board of Management at Allianz SE, which manages 1.2 trillion euros of assets. "Despite challenges in the application of the European carbon emissions trading system, we firmly believe that appropriately structured carbon cap and trade programs play a central role in addressing the challenge of global climate change."
Climate change: Risks and opportunities
Climate change presents far-reaching risks and opportunities for businesses and investors. Some companies in sectors such as electric power, oil and automotive will face high financial risks from carbon-reducing regulations if they are not prepared to act. Insurance companies and businesses with infrastructure in places vulnerable to extreme weather events also face financial exposure.
On the flip side, climate change presents significant economic opportunities for businesses that invest in new technologies and products to save energy and reduce greenhouse gas emissions.
US government and SEC should act
Citing these trends – as well as recent scientific reports concluding that climate change is taking place and that human activities are the primary contributor – investors and companies called for the following three actions:
(1) The US government should take the lead in achieving sizable, sensible long-term reductions of greenhouse gas emissions. Scientists and climate models suggest that a 60 to 90 percent reduction below 1990 levels by 2050 is urgently needed to avoid worst case scenarios. Wherever possible, the national policy should include mandatory market-based solutions, such as a cap-and-trade system, that establish an economy-wide carbon price, allow for flexibility and encourage innovation.
(2) US energy and transportation policies should be realigned to stimulate research, development and deployment of new and existing clean technologies at the scale necessary to achieve greenhouse gas reduction goals.
(3) The Securities and Exchange Commission (SEC) should clarify what companies should disclose to investors on climate change in their regular financial reporting.
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