Institutional investors with a collective $26 trillion under management opened a new front on Thursday in the fight against climate change, urging the private sector to mobilize, follow the money and find new technologies to cut greenhouse gas emissions.
Putting a price on climate-warming carbon emissions, which has been instituted in parts of Europe and elsewhere with limited success, would be “nice to have” but not essential, said 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 in an interview outside a session at UN headquarters on climate risk and energy solutions.
“It’s coming down to following the bouncing ball of money, because it’s money that talks.”
Inside the session, which drew more than 400 participants from banking, insurance, government, labor and institutional investing, the United Nations’ Roland Rich warned the group 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 skeptics and deniers, especially in the United States, made tackling the problem more difficult.
Richard Trumka, president of the AFL-CIO labor 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.”
‘We cannot look to the government’
In an address that drew a standing ovation from a generally subdued crowd, Trumka said the labor federation had backed US legislation to curb greenhouse emissions, and when it failed, started investing in such projects as retrofitting buildings to make them more energy efficient.
Now, he said, more than $200 million had been invested in those projects and some $1.2 billion in workers’ pension assets were committed to infrastructure investing in New York, Oregon and other states. The AFL-CIO still wants climate legislation to make sure the infrastructure investments are made.
Anne Simpson, director of corporate governance for the giant CalPERS pension and health benefits agency that serves California public employees, said the recognition that the private sector could move on its own was a shift from the attitude at the last UN climate talks in Durban, South Africa, in December.
At that meeting, Simpson said, the investment community was “wringing its hands, gnashing its teeth, calling on governments to sort out a level playing field for the rules” before realizing it was up to the private sector to act.
The Durban meeting ended with nearly 200 countries agreeing to forge a new deal by 2015 requiring all nations to limit greenhouse gas emissions, which would enter into force by 2020, an outcome that disappointed many.
“We as the major capital providers have got to work this out. We cannot look to government to solve this problem,” Simpson said in an interview outside the UN session on Thursday. “I think that recognition is critical and 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 total portfolio of about $225 billion. Of that, Simpson said, more than $12 billion was in clean technology, green infrastructure and other environmentally friendly investments.
The conference was convened by the United Nations, the non-profit United Nations Foundation and the Ceres coalition of investors and environmental and other public interest groups.
