API, CEI, Heartland, listen up: Big money calls for big cuts in global carbon emissions


A group of 181 prominent insurers and investors who control $13 trillion in assets—more than four times what the US government spent last year—has called on governments to make drastic reductions in greenhouse gas emissions: 25-40 percent by 2020, from 1990 levels. A statement released at this week’s International Investor Forum on Climate Change in New York City calls for a “strong and binding international treaty that will reduce pollution and catalyze massive global investments in low-carbon technologies.” Swiss Re, HSBC, Allianz Global and the ING group are among the financial giants calling for aggressive action on climate change. The American Petroleum Institute, the Competitive Enterprise Institute, the Heartland Institute, and other deny-and-obstruct opponents of climate legislation and a climate treaty should take heed. 

post by Anne Polansky

The call for an overall global cut of GHG emissions in the range of 25 to 40 percent by 2020 from 1990 levels was clarified further.  Developed nations such as the US, they say, should bear cuts of 85-95 percent by 2050, to allow for less stringent cuts of 50-85% in the developing world.  These levels are more aggressive—much more aggressive in the near-tern—than the caps on carbon emissions in the House-passed climate bill (HR 2454), but are more in line with recommendations being made by some of the leading climate scientists.  And the clarion call is the strongest call for action so far from the world of finance.

This urgent message from major players in the global market should serve as an antidote to the all-too-frequent rhetoric warning that transitioning to a low-carbon society will damage and perhaps even destroy the economy, and lead to prohibitive cost increases in the energy sector and elsewhere.  Such rhetoric is at odds with honest discourse on the true costs and benefits of serious action to slow down the global warming trend, and promotes head-in-the-sand inaction.  Denialists and climate policy obstructionists should see that businesses are increasingly concluding that effective climate policies could stimulate growth and prosperity.

The message doesn’t seem to be getting through to companies most responsible for GHG emissions.  Lobbying disclosure data indicates that oil and gas companies, just in the first quarter of 2009, pumped nearly $45 million into fighting climate legislation and regulation.  And the American Coalition for Clean Coal Electricity plans to scale up media ads and call on its 200,000 members to complain to their Senators and Representatives that a climate bill will raise energy prices, according to the Washington Post

“Building a low carbon economy creates opportunities for investment in new technologies that promise to transform our society in the same way as the introduction of electricity or railways did in the past,” said Lord Stern, author of an influential report of the economics of climate change and a speaker at the gathering.

“I am deeply concerned about the investor risks climate change presents, and the human cost of inaction is unthinkable,” said New York’s Comptroller, Thomas DiNapoli, who is in charge of investing the $116 billion New York State Common Retirement Fund.  He is quoted in the Daily Green, “As investors in the global economy, we can lead the way toward a future of lasting prosperity.”

The policy statement opens with:

Clear, credible long-term policies are critical for investors to integrate climate change considerations into their decision-making processes and to support investment flows into a low-carbon economy and into measures for adaptation. Global emissions of greenhouse gases must be cut significantly in order to avoid dangerous climate change with catastrophic economic and social consequences. We therefore call on world leaders to reach a strong post-2012 climate change agreement in Copenhagen in December.

The specific elements of the call to action are:

• A global target for emission reductions of 50-85% by 2050
• Developed country emission reductions targets of 80-95% by 2050 with interim targets of 25-40% backed up by effective national action plans
• Developing country action plans that deliver measurable and verifiable emission reductions
• Government support for energy efficiency and low-carbon technologies
• Measures that support the move to an effective global carbon market, including ambitious caps, fair and efficient allocation of allowances and links between different trading schemes
• Revisions to the Clean Development Mechanism to ensure real, permanent and verifiable emission reductions
• Public financing mechanisms that leverage private sector finance for investment in developing countries
• Measures to reduce deforestation and promote afforestation
Support for adaptation to unavoidable climate change impacts (emphasis added)

The companies were brought together by several groups, including the Investor Network on Climate Risk in the US and the European Institutional Investors Group on Climate Change, (IIGCC).

The Investor Network on Climate Risk (INCR), coordinated by Ceres, is a network of institutional investors and financial institutions that promotes better understanding of the financial risks and investment opportunities posed by climate change.  Established at the first Institutional Investor Summit on Climate Risk at the United Nations in November 2003, INCR’s membership includes more than 70 investors who manage more than $7 trillion of assets.

The reason IIGCC was formed, says its website, is that:

Climate change is arguably the biggest environmental risk management challenge facing many of the corporations in which we invest. It is already affecting government and fiscal policy and consumer behaviour. So as investors we need to understand the investment implications of this if we are to maintain professional standards of investment management.

Various media and blogosphere coverage:

Washington Post

Huffington Post, by Kevin Grandia, Managing editor, DeSmogBlog.com

Environmental Finance

Social Funds


Sustainable Business

Environment News Service 

CNN’s Hong Kong correspondent picked up the story on Sept. 28

As far as we can tell, the story was not covered by the New York Times or the Wall Street Journal. 

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