Monday, September 22, 2014

Global Investors Call for Divestment and an Ambitious Climate Deal

"The world’s total renewable energy capacity grew at its fastest pace ever in 2013, but global investment in renewable energy still only amounted to $254 billion in 2013. The International Energy Agency (IEA) has estimated that global investment in renewables much reach $1 trillion every year from now until 2050 if the global temperatures are to be kept from rising more than 2°C — the threshold beyond which scientists think climate change will get truly catastrophic."
USA Today:
Major companies, including Big Oil, will make pledges to help fight global warming by cutting their heat-trapping carbon dioxide emissions, protecting the world's forests and reducing methane leakage from fossil fuel production.

They're getting nudged to act, not just by tens of thousands of climate marchers who clogged Manhattan streets Sunday, but by investors demanding action:

  • The divest-invest initiative now includes 180 institutions and local governments as well as nearly 700 individuals, collectively representing $50 billion in assets. Billionnaire hedgefund manager Tom Steyer will formally join the movement on Monday, along with Stephen Heintz, president of the Rockefeller Brothers Fund. Heintz says his fund, the legacy of John D. Rockefeller, may signal a shift in U.S. attitudes. It devotes half its grants to promoting renewable power and climate research.
  • Archbishop Desmond Tutu is slated to announce new fossil fuel divestment. Hundreds of wealthy individuals and at least 50 foundations will pledge to divest any holdings in the world's top 200 oil and gas producers, including ExxonMobil, BP and Chevron.
  • About two dozen large companies will join environmental groups and 24 countries to stop deforestation, which can exacerbate global warming by releasing more heat-trapping carbon dioxide into the atmosphere. They'll commit not to source products — including palm oil, soy and beef — from land where forests have been recently or illegally cut down. They'll join Nestle, Kellogg's, Hershey's and General Mills, which have already pledged action.
  • Six of the world's largest oil and gas companies will commit, via a new partnership with the Climate and Clean Air Coalition, to take steps to reduce methane leaks in fossil fuel production.
  • We Mean Business, a coalition working with thousands of companies and investors, will launch with a report on increasing business support for low-carbon energy. It holds a discussion Monday between top U.N. climate negotiator Christiana Figueres and the leaders of two companies that have pledged to get all their power from renewable sources: Apple's Tim Cook and Ikea's Peter Agnefjäll.
  • Google’s controversial decision to fund the American Legislative Exchange Council (ALEC) was a “mistake,” company chairman Eric Schmidt admitted on Monday, saying the group is spreading harmful lies about global warming and “making the world a much worse place.” Schmidt said on NPR that the “consensus within the company was that [the investment] was some sort of mistake and so we’re trying to not do that in the future.” Google has invested more than $1 billion into wind and solar projects that in total generate more than 2 gigawatts of power, and has set a goal to eventually power its data centers with 100 percent renewable energy.
  • World Bank President Jim Yong Kim will unveil a growing list of companies and cities that, like his organization, support a price on carbon. Advocates say that taxing fossil fuels such as oil and coal, which emit carbon when burned, will increase investments in energy efficiency and renewable power.
  • Last week, more than 340 global institutional investors with at least $24 trillion in assets — including Swiss Re and the Unitarian Universalist Association — called on government leaders to adopt carbon pricing. The European Union has done so, but the United States has not.

"Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions," said the statement - the largest of its kind by global investors on climate change. "Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments."

Alongside the statement, the investor groups have published a report detailing examples of action being taken by investors that support a low carbon, climate resilient economy. While ambitious policy is required in order for low carbon investments to be brought to scale, these examples demonstrate that investors are already acting on climate change in a variety of ways. These activities include direct low carbon investments, the creation of low carbon funds, company engagement, and reducing exposure to fossil fuel and carbon intensive companies.

"Stronger carbon and climate frameworks are needed to catalyze institutional investment," said Fiona Reynolds, managing director of PRI. "The time is now for national governments to overcome the political obstacles that prevent global carbon pricing and hinder long term capital flows into climate mitigation and adaption."

Examples in the report from both developed and developing countries include:
  • Danish pension fund PKA looking to increase its new and existing offshore wind farm investments to -1.5 billion by the end of 2015.
  • U.S. insurer and pension fund provider TIAA-CREFF reduces the carbon footprint of its real estate portfolio by 17 percent, cutting 58,000 metric tons of greenhouse gas emissions.
  • Swedish pension fund AP4 is committed to decarbonizing its entire $20 billion listed equities portfolio.
  • China Utility-Based Energy Efficiency Finance Program provides loans worth $790 million, financing 226 projects and reducing emissions by 19 million metric tons of carbon.
  • ASN Bank in the Netherlands to become fully carbon-neutral by 2030.
  • Zurich Insurance Group to invest up to $2 billion in green bonds, one of many commitments this year that has resulted in 20-fold growth in green bond market since 2012.
  • HSBC Armenia partners with IFC to finance nine small-medium size enterprise energy efficiency projects in Armenia, totaling approximately $25 million and reducing carbon emissions by more than 6,600 tons per year.
  • Global bank ING has in 7 years reduced its energy project loan allocation to coal power from 63 to 13% and increased its allocation to renewable energies from 5 to 39 percent.

In addition, the investor groups have launched a public online database of select low carbon investments made by asset owners such as pension funds and insurance companies. The Low Carbon Investment Registry identifies how institutional investors are directing capital towards low carbon assets. Asset owners around the world will be encouraged to add examples to the Registry leading up to the climate negotiations in Paris.

"The Low Carbon Investment Registry shows how investors are already supporting the transition to a low carbon economy by investing in a variety of different ways - directly into renewable energy projects, into clean energy funds, through green bonds and through the establishment of public-private-partnerships," said Nathan Fabian, Chief Executive of IGCC. "It gives policymakers a better understanding of how private capital is currently flowing into low carbon investments."

Several signatories to the Global Investor Statement on Climate Change are expected to announce significant new individual commitments related to climate risk and low carbon investment at the UN Summit on Climate Change on September 23.

More information:
» Global Investors Think Climate Action And Economic Well-Being Go Great Together
» World Meteorological Organization: All major greenhouse gases reached historical highs in 2013
» IMF Study: United States Is World’s Number One Fossil Fuel Subsidizer

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