A group of 14 major global institutional investors with combined assets of $3.2trn (€2.55trn) have made a “shared commitment” to contribute to financing the transition to a green economy ahead of the forthcoming Rio+20 summit.
The group, the Long Term Investors’ Club, includes pension funds, development banks and state investors (full list below).
They say they recognise the “scale and challenge of investment needed for a green economy”.
The commitment comes as a new report from the UN Environment Programme has highlighted the role institutional investors can play in financing sustainable projects in the absence of bank finance due to the financial crisis.
“We have a responsibility to future generations and a role in green transformation”
“We, CEOs and Presidents of financial institutions, development banks, institutional investors, pension funds from all regions of the world gathered in the Long Term Investors’ Club, acknowledge that we have a responsibility towards future generations and a decisive role to play in a green transformation of our societies,” the investors said in a statement.
“We share the view that environmental, social and governance (ESG) issues affect the performance of investors’ portfolios in a long-term perspective.”
The group supports “innovative instruments” with public and private financing institutions and the promotion of ESG criteria as part of investment decision making.
The investors called for a “more conducive framework for long term investment” saying the current system has strong biases in favour of short term investment.To this end, governments should “revisit” prudential and accounting rules to reflect the business models of investors who have the capacity to finance the green transition.
They also called for a set of indicators to value the “externalities” of investments. The statement continues: “Specific steps could be taken in terms of climate change, resources management, biodiversity, employment and social cohesion in order to channel public and private financial resources on investments in which financial profitability is not immediately apparent.” The LTIC was founded in 2009 by France’s Caisse des Dépôts, Italy’s Cassa Depositi e Prestiti, the European Investment Bank, and German’s KfW.
APG, Dutch asset manager owned by ABP pension giant
IDFC, India’s Infrastructure Development Finance Company Ltd.
Bank Gospodarstwa Krajowego, (BGK) Poland’s state development bank.
Turkiye Sınai Kalkınma Bankası (TKSB), the Industrial Development Bank of Turkey
The Caisse de dépôt et placement du Québec, the Canadian pension manager
China Development Bank (CDB), China’s flagship bank in long/medium-term investment
Vnesheconombank, Russia’s Bank for Development and Foreign Economic Affairs
OMERS, the Ontario Municipal Employees Retirement System.
Caisse de Dépôt et de Gestion, Morocco’s €12bn state investor
The EIB, the European Investment Bank
KFW, Germany’s state-owned development bank
Cassa depositi e prestiti, Italy’s public investor
Caisse des Dépots et Consignations, the French state investment company
The Mubadala Development Company, Abu Dhabi’s state-owned investment vehicle