The Guardian: Investment fund giants demand 90% reduction in carbon emissions

· Institutions try to seize control of green agenda
· Listed firms would have to disclose climate cost

Terry Macalister
Friday February 15 2008

Some of the largest institutional investors in the world yesterday called on the US Congress to introduce a mandatory national policy to reduce greenhouse gas emissions by up to 90% below 1990 levels by 2050.

It is the latest move that underlines the way business leaders have dramatically seized the environmental agenda and are now pushing politicians to tackle global warming.

The group of 40 investors, which includes F&C Asset Management in London and controls $1.5tr (£760bn) worth of funds, also wants the financial regulator, the US Securities and Exchange Commission (SEC), to insist that companies listed in New York and elsewhere disclose their exposure to climate change risk.

The investment houses are demanding that equity analysts and ratings agencies calculate the potential carbon costs for companies such as Shell, BP and electricity utilities which are involved in polluting activities such as producing oil from tar sands and operating coal-fired power stations.

The initiative was unveiled at the Investor Summit on Climate Risk hosted in New York by the United Nations Foundation and the Ceres investor coalition. It would boost investment in energy efficiency programmes and clean energy technologies as well as leaving investors better informed if not less exposed to carbon-intensive activities, the investors argue.

Alain Grisay, chief executive of F&C, said climate change had the potential both to cause “devastating damage” to the economy if nothing is done and to generate very profitable investment opportunities if sensible and early action was taken to mitigate its impact and so he wanted to see US government action.

“Investors and industry need certainty over what the regulatory regime will
be over the next two to three decades in order to release the billions of investment capital that will finance the shift we need to make to a low-carbon energy system,” he added.

Among the other points in the Ceres action plan is support for clean technology with a goal of deploying $10bn collectively over the next two years plus initiatives to reduce the amount of energy used in buildings. The plan aims for a 20% reduction in energy used in core land and building investments over a three year period.

Tony Juniper, executive director of Friends of the Earth, welcomed the initiative last night and said it put further pressure on governments to stop “dithering” and take proper action.

“Its essential that the financial sector properly engages with the climate change issue and that the process out of fossil fuels begins on a large scale but this will not happen until governments legislate. Yet another group of companies are now urging government to put in place policies which quickly deliver a low-carbon economy and politicians need to stop dithering and making excuses,” he said.

F&C, which is working alongside Calpers and many other US public sector pension funds, admits the targets are “very ambitious,” but is convinced they can be realised.

The call on the US Congress to aim for carbon reductions of 60% to 90% was considered achievable because “we are talking about action over 42 years” , it said, noting that these were the kinds of initiatives that scientists were calling for.

The move comes alongside a wave of interest and initiatives from the business community which until recently largely saw climate change as the pre-occupation of environmentalists. More urgent warnings from scientists plus rising insurance bills and other costs associated with global warming have convinced most in the commercial world to act.

Global regulatory action is seen as inevitable now and businesses want to see a level playing field and the kind of worldwide transparency that makes it easier to make investment decisions.

Mindy Lubber, president of Ceres, made clear that the move was partly self-serving. “This action plan reflects the many investment opportunities that exist today to dent global warming pollution, build profits and benefit the global economy. Leveraging the vast energy efficiency opportunities at home and abroad holds especially great promise for investors.”

http://www.guardian.co.uk/money/2008/feb/15/investmentfunds.economics

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