Investors gather to ensure funds are used to combat climate change

6 February 2016

Editor

EU regulation

The UN Secretary-General Ban Ki-moon called on investors to help achieve a doubling in global clean energy investments by 2020 at a meeting in New York last week. Although investments rose to a record high last year of $329 billion they are still not at the levels necessary to meet the Paris climate agreement's goal of limiting global temperature rise to below 2 degrees celsius, according to US sustainability campaigning group Ceres.

At the meeting of global investors organised by Ceres,  the United Nations Foundation and the United Nations Office for Partnerships, the participants discussed how to achieve a shift in the global economy toward exponentially more clean energy and far less carbon – fast enough to meet the Paris climate agreement's long-term objective of reducing net greenhouse gas emissions to zero in order to avoid dangerous climate warming.

Ceres used the event to release a report, Mapping the Gap: The Road from Paris produced with Bloomberg New Energy Finance which shows that to reach the level of investment in new renewable power generation needed to avert dangerous climate change $12.1 trillion of investment will be needed over the next 25 years, which is $5.2 trillion above business-as-usual projections. The report also concluded that most of te $12.1 trillion in new renewable power generation is expected to go to emerging markets in developing countries.

Ceres and Bloomberg New Energy Finance believe that this investment surge will require a greatly expanded use of investment vehicles supporting clean energy, including bonds, asset-backed securities and others that commercial financiers, institutional investors and other capital market players can take advantage of.

Participants at the investor meeting expressed their willingness to increase their investment in clean energy. “On the heels of our 2014 commitments to double clean energy investments to 2 billion euro, we now want to raise the bar even further by quadrupling that increase, to 5 billion euro, by 2020,” said Erik van Houwelingen, board member of ABP, a major Dutch pension fund.  “We’re also aiming to reduce the carbon footprint of our 100 billion euro listed equity portfolio by 25 percent and doubling our investments in high sustainable companies that deliver solutions to social and environmental issues like climate change. We encourage others to also set ambitious goals in contributing to the transition towards a low-carbon economy.”

However, Sue Reid, Vice-President of Climate & Clean Energy at Ceres said more work needed to be done by policymakers globally to encourage change, “There is huge opportunity for expanded clean energy investments today. But to fully bridge the investment gap, policymakers worldwide need to provide stable, long-lasting policies that will unleash far bigger capital flows. The Paris agreement sent a powerful signal, creating tremendous momentum for policymakers and investors to take actions to accelerate renewable energy growth at the levels needed.”

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