Institutional investors with a collective $26 trillion under management have opened a new front in the fight against climate change, urging the private sector to mobilise and find new technologies to cut greenhouse gas emissions.
The pricing of planet-warming carbon emissions, which underscores the EU’s Emissions Trading System, is “nice” but not essential, says Kevin Parker, global head of Deutsche Asset Management.
“It's not going to be long before an investor looking to roll out a new energy plant has to take solar and wind and other forms of renewables very seriously,” Parker said on the fringes of a UN investor summit in New York.
“It's coming down to following the bouncing ball of money, because it's money that talks.”
Inside the 12 January session, which drew more than 400 representatives of banking, insurance, government, labour and institutional investing, the UN’s Roland Rich warned attendees against “putting all our eggs in the government basket.”
“The carbon-burning economy is tomorrow's Rust Belt,” Rich said. “Your job, it seems to me, is to invest in the Microsofts and Googles of the green economy.”
Parker and others noted that climate change sceptics and deniers, especially in the United States, made tackling the problem more difficult.
Richard Trumka, president of the AFL-CIO labour federation that represents some 12 million US workers, was blunt: “It is clear that as long as Congress is effectively controlled by climate change deniers, all of us – investors, companies, workers and the broader public – must take action ourselves.”
Trumka outlined how his federation had invested more than $200 million in efficiency projects – such as retro-fitting buildings – and committed some $1.2 billion in workers' pension assets to infrastructure investments.
Many were disappointed that the December UN Climate Summit in Durban, South Africa, ended with an agreement to forge a binding new deal limiting carbon emissions by 2015, which would enter into force by 2020.
“We as the major capital providers have got to work this out. We cannot look to government to solve this problem,” said Anne Simpson of CalPERS, the giant pension and health benefits agency.
“I think it's a turning point from petitioning politicians into thinking about this as an investment challenge. For me, that's liberating.”
CalPERS, which covers more than 1.6 million California public employees, retired workers and their families, has a portfolio of about $225 billion. Of that, Simpson said, more than $12 billion was in clean technology, green infrastructure and other environmentally friendly investments.