• Investors Call for "Investment-Grade" Climate Policy
  • February 10, 2012 | Author: Thomas A. Hamilton
  • Law Firm: Jones Day - Cleveland Office
  • Leading up to the latest round of United Nations climate negotiations in Durban, a group of 285 investors, collectively managing more than $20 trillion in assets, issued a "2011 Global Investor Statement on Climate Change," urging governments and institutional policy makers to take new policy action to stimulate private sector investment in climate change solutions. According to a press release accompanying the Statement, "[c]urrent levels of investments in low-carbon technology and infrastructure are substantially lower than the $500 billion per year deemed necessary by the International Energy Agency to hold the increase of global average temperatures below 2 degrees Celsius—the target agreed in Cancun last year."

    A report entitled "Investment-Grade Climate Change Policy: Financing the Transition to the Low-Carbon Economy," was released with the Statement. The report emphasizes the importance of investment-grade policy to encourage institutional investors to allocate capital toward climate change solutions, including appropriate governmental incentives to compensate for increased risk and sufficient scale of technology deployment. In addition, the report stresses that long-term policy stability is critical and that retroactive policy changes can significantly damage investor confidence.

    The group of investors calls for domestic and international policy action, including:

    • Definition by governments of clear short-, medium-, and long-term greenhouse gas emission targets and enforceable legal mechanisms and timelines;

    • Lasting financial incentives that favor low-carbon assets;

    • Lasting and comprehensive policies that accelerate implementation of energy efficiency, clean energy, and renewable energy;

    • A legally binding international climate change treaty;

    • Support for the development of the Green Climate Fund and other funds to assist developing countries to address climate change; and

    • Increased efforts to reduce deforestation.

    Investor support for climate action has more than doubled since 2008, when 150 investors with $9 trillion in assets under management first urged government leaders to act on climate change.