Money talks and $4 trillion talks very loudly. So loud in fact that a number of institutional investors, who manage a total of $4 trillion in assets, hope to get the attention of U.S. lawmakers. Their goal is to convince Congress to enact strong federal legislation to curb the pollution that has been widely cited as a major cause of global climate change.
Germany’s Allianz SE, the parent of Firemen’s Fund, joined a number of leading US companies to explain the “business and economic rationale for climate action as they called for a national policy that reduces greenhouse gas emissions consistent with targets scientists say are needed to avoid the dangerous impacts of global warming,” said a bulletin on the Group’s web site (www.allianz.com).
Allianz noted that the Group, “organized by Ceres and the Investor Network on Climate Risk,” had issued a “Climate Call to Action” at an earlier press conference in Washington DC. “The 65 signers include institutional investors and asset managers such as Merrill Lynch, Allianz and the California Public Employees Retirement System (CalPERS), as well as leading corporations such as BP America, PG&E, DuPont, Alcoa, Sun Microsystems and National Grid.”
Their message includes a stern warning that “climate policy uncertainty and the lack of federal regulations may be undermining their long-term competitiveness because it is preventing them from investing in clean energy and climate-friendly technologies and practices.”
“Global warming presents enormous risks and opportunities for US businesses and investors,” stated Fred R. Buenrostro, CalPERS CEO.” To tap American ingenuity and drive business to a leadership position in the low-carbon future, we need regulations to enable the markets to deploy capital and spur innovation.”
Ceres President Mindy S. Lubber, whose organization also directs the Investor Network on Climate Risk, noted: “Investors and companies are asking Washington to set a clear policy direction to address the risks of climate change. The greatest climate risk facing investors and business is the uncertainty caused by the absence of US policy.”
For its part Allianz Board of Management member Joachim Faber indicated that the Group “believes it is essential to put a price tag on carbon, thereby enabling market mechanisms to drive emissions reductions and climate protection. Despite challenges in the application of the European carbon emissions trading system, we firmly believe that appropriately structured carbon cap and trade programs play a central role in addressing the challenge of global climate change.”
The Group called on the U.S. government and notably the Securities and Exchange Commission to recognize “recent scientific reports concluding that climate change is taking place and that human activities are the primary contributor.”
The investors and the companies called for the following three actions:
(1) The US government should take the lead in achieving sizable, sensible long-term reductions of greenhouse gas emissions. Scientists and climate models suggest that a 60 to 90 percent reduction below 1990 levels by 2050 is urgently needed to avoid worst case scenarios. Wherever possible, the national policy should include mandatory market-based solutions, such as a cap-and-trade system, that establish an economy-wide carbon price, allow for flexibility and encourage innovation.
(2) US energy and transportation policies should be realigned to stimulate research, development and deployment of new and existing clean technologies at the scale necessary to achieve greenhouse gas reduction goals.
(3) The Securities and Exchange Commission (SEC) should clarify what companies should disclose to investors on climate change in their regular financial reporting.
Those initiatives seem clear enough and practical enough to at least get the attention of the legislators. If passed, they might even get some attention from the current administration in Washington, which has been singularly indifferent up to now of similar warnings about climate change. If there are any actions in the direction of regulating carbon emissions, they will at least prove that money talks.
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