While Washington Waits, Investors Act on Climate Change
Clean Energy Investment Hits Record $260 Billion in 2011
(3BL Media / theCSRfeed) New York City - January 12, 2012 - Climate change creates enormous economic risks, but investors know it also represents one of the great financial opportunities of our time. And they are not waiting for governments to start moving on their own toward action.That was the key message as 450 global investors controlling tens of trillions from four continents gathered today at the United Nations for the Investor Summit on Climate Risk & Energy Solutions. “Climate change is certain to be a major factor in investments for the foreseeable future—perhaps the biggest investment factor of our lifetimes,” said Kevin Parker, global head of Deutsche Asset Management. He announced that although the pace of climate policy momentum slowed in some countries, the trend nevertheless remained strongly positive with 45 new, carbon-reducing policies adopted globally in 2011 compared with only four negative policy actions. Investors signed onto an action plan calling for greater private investment in low-carbon technologies and tougher scrutiny of climate risks across their portfolios. Investors also announced new guidelines on how companies should be boosting their attention to climate risks and opportunities – and promised much closer scrutiny of companies that ignore them. “Investors are acutely aware of climate impacts on the global economy and corporate bottom lines,” said Jack Ehnes, CEO of the California State Teachers’ Retirement System (CalSTRS), the nation’s second largest public pension fund managing $146 billion in assets. “As a matter of fiduciary duty, we must elevate our attention and action on this huge issue. That means improving our own practices and making sure companies we own are doing the same.” Even with the tough words and record investments, there was strong agreement that bigger steps are needed – from investors, companies and government policymakers – to slow and eventually reduce pollution that is changing the earth’s climate and triggering more extreme droughts, heat waves and other catastrophic events. “Our global carbon footprint is growing and our climate is discernibly changing,” said Mindy Lubber, president of Ceres, which organized the Summit along with the United Nations Foundation and the United Nations Office for Partnerships. “We need leaps, not baby steps, in tackling this colossal threat. And we need them now, not next year.” Still, the Summit was chock-full of examples of strong investor focus on climate change, including: Bloomberg New Energy Finance released new research data showing a record $260 billion in total clean energy investment in 2011, up five percent from $247 billion in 2010 and five times the total attained only seven years ago. Highlights of the ’11 data include a 36 percent surge in total investment in solar power to $136.6 billion and the U.S. overtaking China for the first time since 2008 in total clean energy investment. US investment was a record $55.9 billion, up 35 percent, while China saw investment rise just one percent to $47.4 billion. “The news that the US jumped back into the lead in clean energy investment last year will reassure those who worried that it was falling behind other countries. However before anyone in Washington celebrates too much, the US figure was achieved thanks in large part to support initiatives which have now expired,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “The performance of solar is even more remarkable when you consider that the price of photovoltaic modules fell by close to 50 percent during 2011, and now stands 75 percent lower than three years ago, in mid-2008.” Global investment consultant Mercer issued a new report showing how leading global investors, including the nation’s largest public pension fund, CalPERS, are integrating climate change considerations into investment risk management and asset allocations. The report, "Through the Looking Glass: How Investors are Applying Results of the Climate Change Scenarios Study" comes on the heels of a Mercer report last year showing that climate change could contribute as much as 10% to portfolio risk over the next 20 years. Summit attendees also learned that:
Renewable portfolio standards in 29 U.S. states represent a $400 billion investment opportunity, with much more possible if other states move in that direction.
GE’s Ecomagination unit is growing at twice the rate of the rest of the company and has already earned $85 billion in revenues.