by Robert Kropp

Investor groups attending the 2010 Investor Summit on Climate Risk at the UN endorse a statement calling for climate change policies that encourage private investment.

Arguing that “investors, businesses, and governments cannot wait for a global treaty before taking action,” investor groups representing $13 trillion in assets met at the UN this week, and released the Investor Statement on Catalyzing Investment in a Low-Carbon Economy, which details steps to take to encourage investor participation in a low-carbon economy. 

The Investor Summit on Climate Risk was presented at the UN by the Investor Network on Climate Risk (INCR), a project coordinated by Ceres. In addition to INCR, the statement was endorsed by theInstitutional Investors Group on Climate Change (IIGCC), the Investor Group on Climate Change (IGCC), and the United Nations Environment Programme Finance Initiative (UNEP FI). 

Attendees at the Summit included UN Secretary General Ban Ki-Moon, United States Special Envoy for Climate Change Todd Stern, billionaire investor George Soros, and former Vice President Al Gore. 

The investor statement acknowledges that “incremental progress” was achieved in Copenhagen last month, especially in the commitments to greenhouse gas (GHG) emissions reduction made by the US, China, and India. However, countries must “act now to catalyze development of a low-carbon economy and to attract the vast amount of private capital necessary for such a transformation.” 

According to Paul Clements-Hunt, Head of the UNEP FI, “85% of financing for climate change mitigation will come from private investment.” However, according to reports from Copenhagen, developing nations refused to allow text referring to private investment in any agreement, because of fears that such language might lead to less public investment by developed economies. 

Noting that the comprehensive climate change policies in Germany has led to “eight times more renewable energy jobs per capita than the United States,” the investor statement said, “Governments must provide clear and ambitious policy signals to attract international investment and be competitive in the global race to develop and transition to clean energy and other low-carbon technologies.” 

The statement continued, “Investors will seek every sound investment opportunity, but until governments establish policies and rules that make low-carbon strategies the clear strategic choice for all businesses, we will not be able to deploy capital into low-carbon investments at the scale required.” 

The statement provided a number of recommendations for governments to act upon. Developed countries should establish emission reduction targets of 80–95% by 2050, and developing countries should have clear action plans for emissions reduction. The statement calls on governments to establish a price on carbon, and develop carbon markets “that include mechanisms for directing private financial flows to low-carbon development in developed and developing countries.” 

Because energy efficiency measures have been called “the lowest of the low-hanging fruit,” the statement calls on governments to accelerate the deployment of energy efficient-technologies, and develop and enable financing strategies that encourage private investment. The statement also calls for rapid deployment of renewable energy technologies, investment in new vehicle technologies, and the development of procurement policies that prioritize energy efficiency, renewable energy, and clean fuels. 

In order to encourage private investment, the statement calls for public financing mechanisms “that mitigate risk and allow institutional investors to scale up their investments in appropriate low-carbon solutions, particularly in developing countries,” and dialogue among national institutions, multilateral development banks, bilateral development institutions, and the private sector to leverage private-sector investment. 

In addition, public-private mechanisms should be created to help developing countries in adapting to climate impacts. 

Finally, the statement calls for mandatory corporate disclosure of material climate-related risks. 

A webcast of the Investor Summit on Climate Risk is available here.