World's Investors: Tackle Climate Change

Tackle climate or face financial crash, say world's biggest investors

Global investors managing $32tn are urging governments to phase out all coal burning. Photograph: Alexander Koerner/Getty Images 

Global investors managing $32tn issued a stark warning to governments at the UN climate summit on Monday, demanding urgent cuts in carbon emissions and the phasing out of all coal burning. Without these, the world faces a financial crash several times worse than the 2008 crisis, they said.

The investors include some of the world’s biggest pension funds, insurers and asset managers and marks the largest such intervention to date. They say fossil fuel subsidies must end and substantial taxes on carbon be introduced.

I have posted before about the views of the World Bank and the IMF.

“The long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, of IFM Investors which manages $80bn and is one of the 415 groups that has signed the Global Investor Statement. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”

Investment firm Schroders said there could be $23tn of global economic losses a year in the long term without rapid action. This permanent economic damage would be almost four times the scale of the impact of the 2008 global financial crisis. Standard and Poor’s rating agency also warned leaders: “Climate change has already started to alter the functioning of our world.”

Even conservative think tanks and oil companies have called for action.   And a green economy would be a burgeoning economy.

Thomas DiNapoli, of the $207bn New York State Common Retirement Fund, another signatory, said taking action on global warming not only avoided damage but could boost jobs and growth. “The low-carbon economy presents numerous opportunities and investors who ignore the changing world do so at their own peril.”

We must get out of coal as well as oil.   Oil will still be needed for other purposes than gasoline, for example, even electric cars are going to need grease.  Coal may still have a use in steel production.

A key demand of the Global Investor Statement is to phase out coal-fired power stations across the world. Peter Damgaard Jensen, the CEO of Danish pension fund PKA, said: “Investors, including PKA, are moving out of coal in their droves given its devastating effects on the climate and public health, compounded by its poor financial performance.” 

The investors include some of the globe’s largest pension funds, such as Calsters and ABP, and insurers, including Aviva, AXA and Zurich. They also want an end to subsidies for coal, oil and gas, which the IMF rates at $5tn a year and which the G20 has been promising to tackle for a decade. This measure alone could cut global CO2 emissions by 10% by 2030, according a UN report released in time for the Poland summit.

The alternative is catastrophic, and we have some of the largest investors in the world behind actions against global warming.

The investors said current national pledges to cut carbon would lead to a catastrophic 3C of global warming and that plans must be dramatically increased by 2020. For developing countries, ”finance is the critical enabler of increasing ambition,” said Niranjali Amerasinghe, of the World Resources Institute.