Major Investor Groups Urge Tougher Action On Climate Change

Jan 14, 2010 - Naureen Malik - Dow Jones Newswire

Investor groups representing $13 trillion in assets Thursday urged the U.S. and other governments to put in place stronger policies to curb climate change, warning political uncertainty surrounding the issue stunts development and exposes companies to considerable risk.

Four investor groups, made up of more than 200 institutional investors such as the California Public Employees' Retirement System, or Calpers; Deutsche Bank AG (DB); and HSBC Holdings PLC (HBC), called for short- and long-term emissions- reduction targets, as well as policies that would put a price on carbon dioxide, promote energy efficiency in the energy and transportation sectors and require greater corporate disclosure. At the 2010 Investor Summit on Climate Risk at U.N. headquarters, they also called for novel financing methods to encourage use of low-emissions technology worldwide. They say developed countries should establish targets to reduce greenhouse gas emissions by 25% to 40% by 2022 and by 80% to 95% by 2050.

"There is probably not an industry in the world that is not touched in some shape or form" by the transformation led by climate issues, said Kevin Parker, global head of Deutsche Bank Asset Management, at a press conference. "This is a megatrend."

Highly carbon-intensive companies will underperform those with lower emissions, Parker said, adding Deutsche Bank Asset Management currently has $7 billion in assets dedicated to climate-change-related investments. He said companies focused on increasing energy efficiency are an attractive investment area.

Emissions-heavy utilities in the U.S. should switch to cheap and newly abundant natural gas reserves from shale-rock formations as a stop-gap measure until a longer-term strategy to cut emissions is mapped out, the investors added.

"People who invest in utilities are looking for near no-risk investments," but climate issues are increasing the risk considerably, said Rob McCord, Pennsylvania's state treasurer.

The push to curb climate change isn't wholly altruistic, executives said, noting that companies with strong climate-risk initiatives working with governments having aggressive emissions-reduction programs will lure billions of dollars in investment.

"We are in it for profit," but that doesn't create a dilemma, said Bjorn Graven Larsen, chief investment officer at Danish pension fund ATP.

Although December's major climate summit in Copenhagen fell short of delivering a binding agreement among nations to curb emissions, the conference succeeded in generating commitments from major developing countries such as India, China and Brazil for greater transparency, investors at the conference said

. -By Naureen Malik, Dow Jones Newswires; (212) 416-4210; naureen.malik@ dowjones.com