Global Warming Needs World Climate Change Treaty: Investors

Signed by 181 investors collectively managing more than $13 trillion in assets, the group said that today's investor statement is the largest of its kind on climate change in world history.

"We must chart a new course toward long-term, sustainable business practices," said Mr. DiNapoli, head of the $116.5 billion New York State Common Retirement Fund.

"We cannot drag our feet on the issue of global climate change. I am deeply concerned about the investor risks climate change presents, and the human cost of inaction is unthinkable. As investors in the global economy, we can lead the way toward a future of lasting prosperity," he added.

Mindy S. Lubber, president of Ceres and director of the Investor Network on Climate Risk, which co-convened the forum, said during a press conference that investors have been acting on the issue, putting more than $4 billion into clean technology.

Other efforts have included calling on the Securities Exchange Commission to require better disclosure of climate risk. She said, however, that while these successes are laudable, "they are a mere drop in the ocean of what we need to accomplish."

Ms. Lubber noted, "If we are to bring the planet from the brink of climate catastrophe, we must magnify those actions many, many times. What we need is to create policies that create stable market conditions–policies that will end the boom and bust of renewable technologies, like wind and water."

Without policies to encourage clean energies and discourage high polluting technologies, she said, "investors are stuck at the starting gate in the green race for a low carbon economy."

She also said that "political leaders need the courage to act. There is no more time for delay. Climate change poses enormous financial, security and public health risks."

Ms. Lubber added, "We are still recovering from the devastating consequences of colossal risk mismanagement in the subprime mortgage crisis"; however, "no bailout, no matter how large, could ever restore the earth's natural systems that our commerce and our very survival depend upon, if we were to allow global warming to continue unchecked, over the coming decades."

Lord Stern, chair of the Grantham Research Institute on Climate Change at the London School of Economics and Special Advisor to the group chairman of HSBC on Economic Development and Climate Change, said that 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."

The forum comes in advance of negotiations in Copenhagen this December to ratify a new international climate change treaty after the Kyoto Protocol expires in 2012.

Any outcome of those climate talks depends heavily on the course of debates in the U.S. Congress on climate and energy legislation. The House passed a comprehensive bill in June and Senate consideration of a similar climate bill is expected to begin within weeks.

California State Treasurer Bill Lockyer said, "We owe a duty to all those who come after us to act now. If we fail to lead, if we adopt the attitude that we're not going to act until enough other nations act, we will violate that duty. And we will run an even greater risk of leaving future generations a damaged planet and diminished hopes for prosperity."

Insurers and reinsurers have also called for action on climate control. Lloyd's, for example, has extensively studied global warming and its effects globally.

Lloyd's Chairman Lord Peter Levene told National Underwriter at the Reinsurance Rendez-Vous de Septembre in Monte Carlo last week that more and more people are paying attention to climate change. "It is clearly a real issue. The big unanswered question is how big an issue it is."

He said there are as many who "say it's going to be catastrophic, as those who will say that nothing drastic is going to happen."

He also said that attitudes are changing. "It's almost impossible to determine how much damage it is causing, but the number of those who believe it is causing no damage is decreasing," Lord Levene said.

Today's statement by the investors calls for the following elements to be included in a global climate change treaty:

o A global target for emissions reductions of 50-85 percent by 2050 (1990 baseline).

o Developed country emissions reduction targets of 80-95 percent by 2050 with interim targets of 25-40 percent by 2020 backed up by effective national action plans.

o Developing country action plans that deliver measurable and verifiable emission reductions.

o Government support for energy efficient and low carbon technology.

o Measures that support the move to an effective global carbon market, including ambition caps, fair and efficient allocation of allowances, and links between different trading schemes.

o Revisions to the Clean Development Mechanism to ensure real, permanent and verifiable emission reductions.

o Public financing mechanisms that leverage private sector finance for investment in developing countries.

o Measures to reduce deforestation and promote reforestation.

o Support for adaptation to unavoidable climate change impacts.

Signatures to the statement include state treasurers, controllers, pension fund leaders, asset managers and foundations worldwide. For more information or to see the list, visit http://www.ceres.org.