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June 20, 2013

Investor Coalition Holds First Global Forum on Climate Change
    by Robert Kropp

The Global Investor Coalition on Climate Change, a network of four regional climate change investor groups, holds its first meeting in Hong Kong and launches an action plan to facilitate low-carbon investment. -- Underscoring the urgency of meaningful action on climate change are the most recent findings of the International Energy Agency. IEA's Executive Director, Maria van der Hoeven, summarized them in a recent Huffington Post article.

“The current level of carbon intensity is not consistent with the stated goal of limiting the rise in global temperatures to 2 degrees C,” van der Hoeven wrote. “On the contrary: Were we to continue to emit the same level of carbon dioxide for every unit of energy produced for the next several decades and energy demand were to continue to grow unabated, our planet would be on track to warm by well over 4 degrees C, with potentially devastating impacts.”

A recently formed global network of climate change investor groups, with assets under management in excess of $20 trillion, met for the first time in Hong Kong last week to address the question of what institutional investors can do to combat climate change in the absence of government policy. The Global Investor Coalition on Climate Change (GIC) consists at present of four major regional investor groups, including the US-based Investor Network on Climate Risk (INCR).

The European Institutional Investors Group on Climate Change (IIGCC), the Australia/New Zealand Investor Group on Climate Change (IGCC), and the Asia Investor Group on Climate Change (AIGCC) aare also members of the Coalition.

In advance of the First Global Investor Forum on Climate Change, Christopher Davis of Ceres and INCR said, “The implications for the global economy are enormous and that’s why major institutional investors are committed to take action. But it will take clear market signals from policy makers, such as limits or taxes on greenhouse gas emissions, to ensure the flow of investment capital towards climate solutions is adequate to meet the challenge.”

Among the topics discussed at the Forum were financing initiatives for energy efficiency measures and the potential for renewable energy technologies in emerging markets.

Given the lack of adequate policy signals on climate change, an especially interesting initiative unveiled at the Forum is the establishment of a Low Carbon Investment Registry. The Registry is designed to provide case studies in low carbon investment opportunities, thereby encouraging the sharing of information on the issue among investors. The Registry is expected to launch in early 2014.

“The Registry demonstrates the international collaboration on climate issues, between investors in developed and emerging markets and between public and private sector funds,” the Coalition stated in a press release.

“We encourage investors to use this tool to send a clear message that the importance of increasing capital allocations to low carbon assets is both understood and underway,” the Coalition continued. “Better communicating low carbon investment successes will encourage governments to provide the stronger policy signals that investors need to increase their low carbon capital allocations.”

The GIC also released an Action Plan on Climate Change at the Forum, which covers the years 2013-15. Signatories to the Plan commit to the following actions:
Support and coordinate the international work of investors on climate change;
support members in integrating climate change into investment practice;
build investor capacity on low carbon investing;
improve engagement with companies on their approach to climate change; and
work with governments to improve climate related policy.

Plans for working with governments include:
• An international framework that sets clear targets for greenhouse gas (GHG) emissions
reductions for the short, medium and long term, and that provides the necessary
mechanisms and institutions to achieve the targets;
• improved policies on carbon regulation and pricing, fossil fuel subsidies and
regulatory barriers to dissemination of clean technologies;
• the development of policies that provide appropriate incentives and investment
certainty to facilitate financing of renewable energy, energy efficiency, adaptation and
climate resilience at scale; and
• the development of effective bilateral and multilateral support mechanisms for low
carbon investments, for example the Green Climate Fund.

Despite the lack of concrete government action, several speakers at the Forum noted that “investors are used to dealing with uncertainty, as this is the very nature of the investment business,” according to the press release. “Therefore, despite insufficient policy support and continuing economic difficulties in many countries arising from the credit crunch, investors and financial institutions are moving to support low carbon developments and improving their ability to manage climate change within regular investment analysis.”

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