$20trn investor group calls for financial incentives to invest in low carbon assets, ahead of Durban

Long-term policy and clear carbon reduction targets outlined in statement.

A group of 285 major institutional investors with combined assets of $20trn (€14.6trn) have stepped up their call for governments and policy makers to take “new and meaningful steps” to fight climate change ahead of next month’s UN summit in Durban.

Noting that current investments in low-carbon technology is falling far short of the estimated $500bn needed annually, the group says private investment will only flow if it is supported by “clear, credible and long-term policy frameworks that incentivize investments in low-carbon technologies rather than continuing to favour carbon-intensive energy sources”.

The statement has been sent to the G20 and other governments ahead of the UN Framework Convention on Climate Change (UNFCCC) summit in Durban that starts on November 28. It outlines the “investment-grade climate and energy policy” necessary to attract large scale investment in solutions to climate change.

A key point, the investors say, is policy duration: “Investors – in particular, those making large investments in areas such as infrastructure and power generation – need long-term policy certainty. If policy instruments have a short time horizon or there is the likelihood that future governments will significantly change the policy framework, investors will tend to invest elsewhere.”In addition, the investors say clearly defined, short-, medium- and long-term greenhouse gas emission reduction targets with comprehensive and enforceable legal mechanisms are needed. To encourage investment, lasting financial incentives that shift the risk-reward balance in favor of low-carbon assets should also be initiated.

“Put the right incentives in place” – Christiana Figueres

The statement has been coordinated by a coalition of investor bodies. They include the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Investors Group on Climate Change (IGCC) in Australia and New Zealand. Also involved are the UN Environment Programme Finance Initiative (UNEP FI) and the UN Principles for Responsible Investment.

The number of investors backing the statement has grown from the 150 that signed the groups’ first declaration in 2008, making it the largest ever investor grouping demanding action on climate change.
UNFCCC Executive Secretary Christiana Figueres, said the statement would help to give governments both the confidence and the knowledge to put the right incentives and mechanisms in place.