15 January 2014 — The impacts of climate change on the global economy can no longer be ignored, the United Nations senior climate official told investment leaders today, urging them to ‘green’ their portfolios by supporting renewable energy assets and shift away from fossil fuel investments.
“The continued and dangerous rise in greenhouse gases in the atmosphere is in large part the direct result of past investments in energy and mobility systems based on the use of fossil fuels,” said the Executive Secretary of the UN Framework Convention on Climate Change, Christiana Figueres. “New investments must now assist in reversing this unsustainable trend, and quickly if the world is to have a chance of staying under a 2 degree Celsius temperature rise.”
Ms. Figueres was speaking at the 2014 Investor Summit on Climate Risk which took place at UN Headquarters in New York. Hundreds of financial, corporate and investment leaders with more than $20 trillion combined assets attended the event.
The impact of climate change is becoming increasingly evident, with extreme weather in many parts of the world disrupting local economies and causing billions of dollars in damages to the economy. According to the International Energy Agency, $36 trillion of global investment in clean energy will be required by 2050 to meet the internationally agreed goal of limiting global temperature rise to less than 2 degrees Celsius.
While many governments are already shifting their policies to support more sustainable energy and clean technologies, financial investors are still heavily investing in high-pollution assets, while ignoring the risk that climate change poses to the livelihoods of millions of people.
The most recent Global Climate Investment Risk survey by the Asset Owners Disclosure Project showed that only 5 of 460 investment funds received a climate-friendly AAA rating, while 173 funds were rated poorly because they are taking no action.
Ms. Figueres said that investment decisions need to reflect the clear scientific evidence on climate change, as well as grasp the reality that if no further action is taken climate change can devastate the lives, livelihoods and savings of many.
“After the IPCC report that has come out, identifying the risks of climate change on investment portfolios and after this conference today, frankly no one can claim ignorance,” Ms. Figueres said at a press conference this afternoon, referring to the reports released by the Intergovernmental Panel on Climate Change, the latest of which calls global warming “unequivocal.” The report also confirms that there is a 95 per cent probability that most of the warming since 1950 has been caused by human influence.
“I urge institutional investors to request companies they are invested in to disclose their carbon footprint and potential stranded assets such as those linked to the mining, exploration and burning of fossil fuels, and for members of pension funds to hold their trustees to account in this respect,” she said.
Ms. Figueres said it is important for investors to support and encourage national and international policies that seek to combat climate change, adding that they will have the opportunity to do so at the Climate Summit hosted by the UN Secretary-General in September, which is anticipated to build momentum for a strong global climate agreement in 2015.
“The Summit is designed to harvest and gather all the efforts of governments and other stakeholders. We know that governments will not be able to change the emissions trajectory on their own. Therefore, the efforts of stakeholders such as the investment community are crucial,” she said.
A first step in support of the Climate Summit would be for asset owners and managers to request that all companies within their portfolios end the practice of spending shareholder funds on opposing government clean energy policies and action nationally and globally on climate change.
Today’s summit was co-organized by CERES – a coalition and network of over 130 pension funds, investors and non-profit organizations, the UN Fund for International Partnerships and the UN Foundation.