The world’s largest investors have called for ‘a new dialogue’ on climate change policies despite the significant progress that has been made in this area.
In an open letter to the governments of the world’s largest economies, a global alliance of institutional investors has warned that current policies are insufficient to avert “serious and dangerous impacts from climate change” and that extreme weather events continue to disrupt local economies, companies and investments. The letter was sent ahead of next week’s UN climate change conference in Doha, Qatar.
The letter outlines several points that need to be included in ‘investment grade’ climate change policies such as clear short, medium and long term targets for greenhouse gas emission reduction, incentives to shift risk and reward balances towards low-carbon investment and achieve scale through large investments, harness the power of markets to find the cheapest way to reduce emissions and align policies with investment cycles of a decade or more.
Scottish Widows Investment Partnership (SWIP), one of the 450 investors involved in the letter and committee chair in the Institutional Investors Group on Climate Change in Europe, said climate change could substantially undermine long term investment returns.
“Unless urgent and aggressive action is taken, the impact could be extremely harmful by the second half of this century, if not earlier,” SWIP head of sustainability Craig MacKenzie said. “Public policy is failing to provide the reliable, long-term, price signals investors need in order to invest the hundreds of billions of pounds necessary to transition to a low carbon economy.”
While investors are addressing climate risks through direct investments in renewable energy, low-carbon energy infrastructure and clean technology, and encouraging companies to improve energy efficiency and reduce emissions, “these efforts are not yet sufficient and must be scaled up dramatically,” the letter said. “Further delays in implementing adequate ambitious climate and clean energy policy will increase investment risk for institutional investors and jeopardise the investments and retirement savings of millions of citizens.”
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