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Market News

 March 24, 2007
$4 Trillion Backs Latest Call for Action on Climate Change

 Washington, USA (by Green Biz) -- For the first time, dozens of institutional investors managing $4 trillion in assets today called on U.S. lawmakers to enact strong federal legislation to curb the pollution causing global climate change.

Joined by a dozen leading U.S. 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.

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 U.S. businesses and investors," said Fred R. Buenrostro, chief executive officer at CalPERS, the country's largest public pension fund, with $230 billion 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."

"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 U.S. policy."

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.

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. Leadership by the U.S. government to achieve sizable, sensible long-term reductions of greenhouse gas (GHG) emissions in accordance with the 60-90 percent reductions below 1990 levels by 2050 that scientists and climate models suggest 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. A realignment of national energy and transportation policies to stimulate research, development and deployment of new and existing clean technologies at the scale necessary to achieve GHG reduction goals.
  3. The Securities and Exchange Commission (SEC) to clarify what companies should disclose to investors on climate change in their regular financial reporting.
"As institutional investors focused on the long-term financial performance of a company, we expect a thorough analysis of all significant business liabilities," said Connecticut State Treasurer Denise L. Nappier. "Leading companies have already made progress working to not only assess and report the risks posed by climate change, but to also set in place strategic plans to foster future growth and success."

"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 $1.6 trillion 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."

"California is the country's leader when it comes to fighting climate change," said California State Treasurer Bill Lockyer. "But states and local governments, no matter how aggressive, can only do so much. To effectively combat global warming, we need action on a national scale. We need federal leadership now to preserve our future, safeguard our economic competitiveness, protect investors and help businesses minimize their risks and maximize their opportunities. The longer the federal government waits, the greater the cost our nation and its people will pay."