Those gathering at the UN in New York on Wednesday for the biennial Investor Summit on Climate Risk are facing a new world and a new reality. The Paris global climate agreement, inked in December, has confirmed that every nation is now on an irreversible path to a low -- perhaps even zero -- carbon economy. The challenge now is not the certainty, the direction or the ultimate destination of this transformation: it is the speed and how to scale up the opportunities. For some -- especially those with significant fossil fuel exposure -- it is the risks of stranded assets and finding a way to navigate across what may be uncharted waters of energy diversification and restructuring businesses and economies. The winds of change from Paris are already shifting policy and financial flows towards ever cleaner and renewable energies and sustainable infrastructure. The World Resources Institute concludes that the eight largest emitters -- Brazil, China, the European Union, India, Indonesia, Japan, Mexico and the United States -- will double their renewable energy supplies as a result of their action plans, known as Nationally Determined Contributions. And this is likely to be an underestimate: China, for example, has stated it will peak its emissions around 2030 and generate a fifth of its energy from low carbon sources by 2030. Many experts expect all this to happen far earlier as a result of the strong signal from Paris, and not just in China, but in many other parts of the world. Among the encouraging signs from all corners of the world: Brazil has a 254-megawatt solar farm under construction, SoftBank and other companies have committed billions of dollars to solar in India, and Africa will soon have its largest solar power plant operational in Morocco. The United Arab Emirates, whose wealth has been based on fossil fuels, is drawing up a sustainable development plan 'beyond oil.' The United Kingdom has announced it will shut down its last coal-fired power station by 2025--currently a quarter of that country's electricity is generated from coal. The long-term extension of wind and solar federal tax credits in the U.S. will spur an additional73 billion in clean energy investment by 2020 and just this month American Electric Power agreed to install 900 megawatts of wind and solar in Ohio. Goldman Sachs and the New York State Comptroller's office have announced a new2 billion low-carbon index fund. Globally, according to new figures from Bloomberg New Energy Finance, almost330 billion in new clean energy investments occurred in 2015, a record high and up six fold from just a decade ago. A record42 billion of green bonds were issued last year, up from almost zero in 2007. In 2015 clean energy investments in low income countries matched investments in the OECD nations. These underline some of the many positive shifts occurring. However, if we are to keep a global temperature rise below 2 degrees C, and even better 1.5 degrees C, by the end of the century, trillions of dollars will be needed. The International Energy Agency estimates that $68 trillion will be invested in energy up to 2040. Clean energy, energy efficiency and low or zero emission vehicles need to take an ever increasing slice of this market if the promise of Paris is to be realized. Every sphere of the investment community needs to get on board. Of the $329 billion invested in clean energy in 2015, just under $200 billion was asset financing for utility-scale projects such as wind farms, solar parks and biomass plants. The next largest chunk, $67 billion, was spending on rooftop and other small-scale solar projects. Venture capital raised for clean energy was just under $6 billion. While these numbers may sound impressive, they are still precious little compared to the trillions of dollars that are needed from institutional investors every year to accelerate clean energy at the levels necessary to prevent dangerous climate change. But, just as importantly in the wake of the Paris deal, investors should also be elevating their focus of better managing climate risks. The kind of carbon foot-printing analysis done by the California Public Employees Retirement System (CalPERS), the United States' largest public pension fund, is a case in point. Its analysis showed that 80 companies in its 10,000-company portfolio accounted for fully half of the $300 billion fund's total carbon footprint. As CalPERS' Investment Director of Global Governance, Anne Simpson noted in Paris: "This study means we can be laser-focused on where to take our engagement. We want the underlying companies in our portfolio to be aligned with the transition to a low-carbon economy." Investors, nationally and globally, should also be pressing for stronger company disclosure of the climate risks they are facing in order to better evaluate which companies are well positioned -- or poorly positioned -- to compete in the emerging low-carbon global economy. Working with Ceres, investors successfully petitioned the U.S. Securities and Exchange Commission (SEC) to require companies to provide such disclosure, but the quality of the disclosure to date is still far short of meeting the SEC's guidance. Investors also need to form new alliances with progressive venture capitalists, countries, corporations and banks, both private and multilateral, in order to de-risk investments in clean energy and sustainable, low carbon infrastructure. The actions needed are legion, but so too are the rewards for investors and companies who make the shift early and embed the transition rapidly. Paris has built upon emerging shifts towards a cleaner, greener and far smarter development path for the 21st century. It has sent a clear, unequivocal and determined low carbon signal to markets and economic sectors everywhere: The course is irreversible, but the pace and breadth must now be the focus. It is time for investors to get down to the serious business of transforming the bold ambition of the new global agreement into a low-carbon economic reality that benefits all nations and people. Christiana Figueres is Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) and Mindy Lubber is president of the nonprofit sustainability group Ceres that, along with the United Nations Foundation, is organizing the Jan. 27 UN Investor Summit on Climate Risk. See the original blog post from Huffington Post here.
This column is published in collaboration with Connect the Drops , a partnership between business and environmental groups to promote conservation and reuse of California water supplies. Four years of drought have brought opportunity, and enabled California to pass long-awaited policy and ballot measures to ensure a sustainable water supply – most notably the historic groundwater law and $7.5 billion water bond in 2014. In 2015, we continued to make steady progress at remaking California’s water future. Californians have reduced urban water use by 27.1 percent in the five months since emergency conservation regulations took effect in June. We also saw some important bills signed into law, such as SB 555, which addresses the significant volumes of water currently wasted through leaking water agency infrastructure. Signed in June, SB 88 has been in the spotlight lately, as the State Water Resources Control Board develops regulations that require the measuring and reporting of water diversions. This information will be critical to make smarter and more informed decisions about our state’s water supply. But we’re far from done. We need to keep plugging away and not let a season of heavy precipitation slow our momentum. There is much more we can and should do to encourage the most efficient use of the water we already have. A number of policy proposals have been kicking around in Sacramento for years, and some new ideas are starting to take shape. For 2016, we need to get these ideas to the finish-line: Water from our sinks and laundry shouldn’t go to waste. Introduced last year, AB 1463 (Gatto) would require the State Water Resources Control Board to establish water-quality standards for onsite water recycling systems. AB 1463 will help expand the use of on-site recycling systems, which will reduce demand for potable water while ensuring public health is maintained. Everyone should know their water footprint. Requiring sub-metering of dwelling units for water service would encourage conservation in multifamily residential rental buildings, as residents would understand and be responsible for their own water footprint. Senator Lois Wolk has introduced this legislation for several years (most recently SB 7) but it has yet to pass. Let’s face it, we need more money. A recent Public Policy Institute of California report found there is a $2bn to $3bn annual funding gap in five key water management areas, including storm water capture and integrated water management. A voter initiative passed in 1996 – Proposition 218 – limits the ability of local water agencies to raise revenues to pay for local needs, such as critical stormwater infrastructure. Under some interpretations, Prop. 218 also can limit efforts to conserve water through tiered pricing structures. We need to address this shortcoming in the California Constitution. A ballot measure recently submitted to the state Attorney General for consideration on the November 2016 ballot – The California Water Conservation, Flood Control and Stormwater Management Act of 2016 – would address these issues. Our precious water shouldn’t be funneled to the ocean . Treated wastewater should be put to beneficial use. The Hyperion Treatment Plant in Los Angeles discharges more than 250 million gallons of wastewater each day into the Pacific Ocean. Instead, this water could be treated and reused. A proposal by Senator Hertzberg, SB 163, would require, by 2026, all wastewater treatment facilities discharging through an ocean outfall to achieve at least 50 percent reuse of the facility’s actual annual flow for beneficial purposes. This could add up to a lot of water. We’ve proven we can conserve. Let’s keep it up . The state water board is currently deciding what’s next for mandatory water conservation targets in 2016. Staff recently released a proposal for version 2 of the emergency regulations. We should continue water conservation in a smart way, and there’s still room to improve. To that end, we need to think about what’s next for the 20x2020 Water Conservation Plan, which in 2010 called for a 20 percent per capita reduction in urban water demand by 2020. We can do more. Let’s get these proposals hashed out once and for all and keep up the momentum we’ve had in Sacramento for the last few years. Moreover, a recent poll from the Public Policy Institute of California (PPIC) found that “Californians are most likely to name water and drought (27%) as the most important issue facing the state, followed closely by jobs and the economy (24%).” Stakeholders should join together on these proposals to ensure we are on track for a sustainable water future in California. Ceres’ Connect the Drop’s campaignjust got a shot in the arm with five new companies joining ( Clif Bar, Genentech, Fetzer Vineyards, Qualcomm Incorporated and VMware ) and we’ll be hitting Sacramento in the spring, advocating for policies that ensure California values every drop. See the original blog post from Water Deeply here.