Investors and policymakers participating in the two-day gathering include UN Secretary General Ban Ki-moon, former U.S. Vice President and Chairman of Generation Investment Al Gore, and senior investment executives of many of the world’s largest pension funds and other institutional investors.
The Forum comes on the heels of a new International Energy Agency report stating that global temperatures are currently on track to rise between 3.6 °C and 5.3 °C, a change that would have dramatic adverse effects on every sector of the global economy, from agriculture to automobiles.
“The GIC Forum is an extraordinary gathering that signals the urgency major capital market players attach to climate change and its far-reaching economic impacts,” said Christopher Davis, director of Investor Programs at Ceres, a nonprofit group that coordinates the Investor Network on Climate Risk, (INCR), one of four investor networks that comprises the GIC.
Davis, who is representing INCR in Hong Kong, said a key goal of the forum is to engage Asian investors on climate change as a key investment risk and opportunity.
The forum will also focus on sharing best practices on integrating climate concerns into investment practices and on encouraging investors to engage with their portfolio companies about their own climate strategies.
Investors also have a major role to play in directing capital towards climate change solutions such as clean energy, efficient technologies and resilient infrastructure, Davis said.
In addition to INCR, the Global Investor Coalition includes the Europe-based Institutional Investors Group on Climate Change, the Australia/New Zealand-based Investor Group on Climate Change, and the Asia Investor Group on Climate Change. GIC’s goal is to reduce climate risks to investors and the global economy by encouraging strong carbon-reducing government policies that will galvanize increased low carbon investments.
“When $20 trillion dollars in capital speaks, companies and governments tend to listen,” Davis said. “GIC’s investor members have a critical role to play in moving governments and businesses to take the action necessary to avoid the worst impacts of climate change, and to accelerate the necessary transition to a low carbon economy.”
“To date, governmental efforts to address climate change have been inadequate,” Davis added. “The implications for the global economy are enormous and that’s why major institutional investors are committed to take action. But it will take clear market signals from policy makers, such as limits or taxes on greenhouse gas emissions, to ensure the flow of investment capital towards climate solutions is adequate to meet the challenge. The Global Forum on Climate Change is an important step forward in advancing investor engagement on this critical issue.”
About Ceres
Ceres is a Boston-based nonprofit organization mobilizing company and investor leadership on climate change and other sustainability challenges. Ceres coordinates the Investor Network on Climate Risk, a network of more than 100 institutional investors with collective assets totaling more than $11 trillion.
These financial leaders join more than 150 other American businesses, including industry icons General Motors Co., Intel and Nike and more than 100 ski areas, in asserting, “Tackling climate change is one of America’s greatest economic opportunities of the 21st century … There must be a coordinated effort to combat climate change—with America taking the lead here at home.”
“As the global economy moves toward a low-carbon future, governments that act aggressively to enact strong, long-term climate and energy policies will reap the biggest rewards,” said Jack Ehnes, chief executive officer of CalSTRS, the world’s largest educator-only pension fund serving 862,000 beneficiaries with a portfolio valued at $167 billion. “In order to tackle the global climate crisis, we must realize the strength of our combined efforts. That is why CalSTRS signed the Climate Declaration. U.S. policy leaders need to step up on this issue and embrace climate change policies as an economic opportunity.”
Investors have been an important force in supporting policy changes related to clean energy and efficiency. Last year, investors managing $800 billion in assets called on Congress to renew the Production Tax Credit for renewable energy, which was ultimately extended for another year. Investors have also been outspoken proponents of state Renewable Portfolio Standards (RPSs) that more than two-dozen states have enacted to boost sourcing of wind, solar and other renewable energy. RPSs have catalyzed billions of dollars of investment, thousands of new projects and hundreds of thousands of good-paying jobs, including 30,000 new jobs in 2012 alone.
“Being smarter when it comes to climate change is the right thing to do for all of our families, and it also will translate into economic and investment opportunities,” said Oregon State Treasurer Ted Wheeler, who has previously called for better disclosure of climate-related opportunities and risks. “I am proud to stand with Oregon’s largest employers and premier ski destinations to recognize that a cleaner future will also be a more profitable one.”
Today’s announcement comes on the eve of the first Global Investor Forum on Climate Change, sponsored by Ceres’ Investor Network on Climate Risk (INCR) along with the Asia Investor Group on Climate Change, the EU-based Institutional Investors Group on Climate Change and the Investor Group on Climate Change, which represents Australian and New Zealand investors.
The two-day event will bring together investors and financial institutions from both developed and emerging markets for the first time to discuss the challenges presented by a changing climate, as well as the imperative to scale up investment in low-carbon infrastructure and business. Al Gore, co-founder and chairman of Generation Investment Management, and Ban Ki-moon, Secretary-General of the United Nations, will address the assembly via video.
“Without the participation of the financial community, we won’t get low-carbon solutions to the scale needed to address climate change, nor will the U.S. capture the full economic benefits of building a global clean energy economy,” said Anne L. Kelly, director of Business for Innovative Climate and Energy Policy (BICEP), a Ceres-led business network that helped launch the Climate Declaration in April. “We are pleased to see strong support from the investor community on climate change policy, and it couldn’t have come at a better time. We urge the investors meeting at this week’s event to take the challenge of tackling climate change seriously.”
In addition to CalSTRS and the Oregon Office of the State Treasurer, Climate Declaration investor signatories include: Boardwalk Capital Management; Boston Common Asset Management, LLC;
Calvert Asset Management Company, Inc.; Chrysalix; Domini Social Investments LLC; ESG Integrated Solutions; First Affirmative Financial Network, LLC; Friends Fiduciary Corporation; Green Century Capital Management; Leadership Council of the Sisters, Servants of the Immaculate Heart of Mary; Mercy Investment Services, Inc.; Pax World Management Corp.; Portfolio 21 Investments; Sisters of St. Dominic (Caldwell, NJ); The Christopher Reynolds Foundation; The Sustainability Group at Loring, Wolcott and Coolidge; Tri-State Coalition for Responsible Investment; Trillium Asset Management; Walden Asset Management; and Zevin Asset Management.
Over the course of an ongoing campaign organized by Ceres and BICEP, other leading businesses and investors, as well as individuals, are encouraged to sign the Declaration and join the call to action. For more information about the Climate Declaration, please visit www.climatedeclaration.us.
More information on the Global Investor Forum on Climate Change is available at investorforumonclimate.com.
About Ceres
Ceres is a nonprofit organization mobilizing business leadership on climate change and other sustainability challenges. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $11 trillion. For more information, visit http://www.ceres.org
About BICEP
BICEP (Business for Innovative Climate & Energy Policy), a project of Ceres, is an advocacy coalition of businesses committed to working with policy makers to pass meaningful energy and climate legislation enabling a rapid transition to a low-carbon, 21st century economy – an economy that will create new jobs and stimulate economic growth while stabilizing our planet’s fragile climate. BICEP is a project of Ceres. For more information and a list of member companies visit: http://www.ceres.org/bicep
About CalSTRS
The California State Teachers’ Retirement System, with a portfolio valued at $167.2 billion as of April 30, 2013, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. For 100 years, CalSTRS has served California's public school educators and their families, who today number 862,000 from the state’s 1,600 school districts, county offices of education and community college districts.
About the Oregon State Treasurer
The Oregon State Treasury protects public assets and manages a portfolio valued at $82.4 billion as of April 30, 2013. State investment policies are overseen by the Oregon Investment Council, of which the Treasurer is a member. The Treasurer also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.
]]>That is the key finding of Power Factor: Institutional Investors’ Policy Priorities Can Bring Energy Efficiency to Scale, a new report issued today by Ceres and its Investor Network on Climate Risk (INCR). Based on the input of nearly 30 institutional investors and other experts from the energy, policy and financial sectors, Power Factor cites three areas of policy—utility regulation, demand-generating policies and innovative financing policies—that can take energy efficiency financing to a scale sufficient to attract significant institutional investment.
Investment analysts estimate that climate change could contribute ten percent of overall risk within institutional investment portfolios. Furthermore, the International Energy Agency estimates that one third of emissions reductions must come from energy efficiency in order to avoid the worst impacts of climate change. Energy efficiency-related investments thus offer institutional investors an attractive opportunity to manage the risks of climate change while earning returns.
“Energy efficiency offers investors a potent one-two punch: stable returns and an important strategy for mitigating climate-related risks,” said Mindy Lubber, president of Ceres and director of INCR. “Policymakers and regulators should work to unlock capital from institutional investors for energy efficiency by promoting the policies identified in this report. Many of these policies do not require public funds, and they can put money back into the pockets of homeowners and business leaders around the country.”
Although institutional investors hold shares in energy services companies, have improved energy use in their real estate investments, and have filed dozens of shareholder resolutions encouraging more efficient energy use at corporations within their portfolios, the report argues that the ability drive the financing of energy efficiency projects—financing retrofit loans through a secondary market—is unavailable to them. Secondary markets are routinely used to bundle loans, such as mortgages and car loans, and repackage them as securities or bonds. Investors can then purchase shares of these products, and sell them as they would a share of stock.
“CalSTRS has made a commitment to energy efficiency. In the last year alone, we’ve engaged nearly 100 of our public equity portfolio companies concerning their energy efficiency efforts. In 2007, 47 percent of buildings in our real estate portfolio received top Energy Star scores; today over 90 percent make that mark,” said Jack Ehnes, CEO of the California State Teachers Retirement System (CalSTRS). “However, while many of the largest investors in the country are taking action on energy efficiency, more is needed. Smart policy fixes can help us go further to both realize the massive energy efficiency investment opportunity that exists and help avoid the worst of climate change and the risks it presents to our portfolios.”
“Investors are interested in energy efficiency, but we need a strong pipeline of projects and better information to maximize the investment opportunity,” said Ken Locklin, managing director, Impax Asset Management LLC. “The changes we are seeing at the local level, including stronger public utilities regulations and disclosure standards for building energy performance are all encouraging factors.”
Specifically, investors cited several areas of policy that would help to build up a secondary market for energy efficiency retrofit loans:
“In order for California to realize the full advantages of energy efficiency, we need to focus on policies that encourage institutional investor participation and job creation. We know from our investment colleagues here and around the country that we’re facing similar challenges and opportunities,” said California State Controller John Chiang. “This is why I am sponsoring legislation in California that will scale-up commercial sector energy efficiency improvements to a level that would be attractive to institutional investors. As this report indicates, the right policies can overcome barriers to low-cost financing for projects that create jobs and use less energy.”
A webinar will be held on June 6, 2013, from 3:00-4:00 p.m. ET/12:00-1:00 p.m. PT to provide an overview of the report. To attend, please register at this link.
About Ceres and INCR
Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $11 trillion. For more information, visit http://www.ceres.org
]]>Angelides is currently President of Riverview Capital Investments, a real estate investment firm which focuses on clean energy projects and sustainable urban development. From 1999 to 2007, he served as California’s State Treasurer. During his eight years in elected office, Angelides called for a renewed push in shareholder activism and launched the Green Wave Initiative, encouraging investment in green technologies and urging companies to address the financial risks of climate change and reduce their energy consumption.
The Bavaria Award is presented by Ceres and Trillium Asset Management each year to honor an inspiring leader working to move capital markets toward a system that balances economic prosperity with social and environmental concerns. The award honors Joan Bavaria, a pioneer of social investing who founded Ceres and Trillium Asset Management. Joan Bavaria passed away in 2008.
“Phil’s actions were bold and transformational, given that at the time, no other state pension fund had taken steps to incorporate environmental impact into their investments.” said Trillium’s CEO Matt Patsky.
“Phil Angelides has worked tirelessly to push investors and the business community toward a sustainable economy. As California State Treasurer, he helped spur investments that increased returns, created jobs and addressed the financial risks caused by the changing environment,” said Mindy Lubber, president of Ceres and director of the Investor Network on Climate Risk (INCR). “Phil embodies the spirit of the Joan Bavaria Award and we are honored to acknowledge his contribution to the sustainable investing community.”
Angelides also served as Chairman of the Financial Crisis Inquiry Commission, a bipartisan panel charged with conducting the nation’s official inquiry into the causes of the financial and economic crisis and presenting findings and recommendations to the President and Congress. Since 2007, Angelides has served as Chairman of the Apollo Alliance, a national coalition of business, labor, environmental and community leaders committed to creating green jobs and building a clean energy economy.
A founding member of the Ceres-led Investor Network on Climate Risk, Mr. Angelides served on the INCR Steering Committee and was a motivating force behind the first Investor Summit on Climate Risk at the United Nations in New York. Over the course of his career, he has helped mobilize financial leaders to act on climate and sustainability issues.
“The enduring strength of our economy and society is inextricably tied to our willingness to embrace investments and business practices that create sustainable enterprises, broaden economic opportunity, and protect our environment,” said Mr. Angelides. “I am deeply honored to receive the Joan Bavaria Award and remain committed to supporting the critical efforts needed to confront the enormous economic and environmental risks posed by climate change.”
About Ceres
Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of more than100 institutional investors with collective assets totaling more than $11 trillion. For more information, visit http://www.ceres.org
About Trillium Asset Management
With a history spanning three decades, Trillium is the oldest independent investment advisor focused exclusively on sustainable and responsible investing. Trillium manages over $1 billion in assets for clients including high net worth individuals, foundations, endowments, religious institutions, and other non-profits. To learn more about Trillium, please visit http://trilliuminvest.com.