A hush-hush group of the world’s biggest pension funds brought together privately by HRH Prince Charles, the Prince of Wales, and known informally as the P8 – an allusion to the G8 group of the world’s wealthiest nations – is to release an action plan on fighting climate change later this summer. The plan will be sent to global policy makers with the aim of lobbying for the best possible regulatory and financial environment that would enable pension funds to start using their financial muscle as long-term investors to increasingly take stakes in companies developing sustainable energy solutions.
The investors, which collectively manage about $3 trillion in retirement money, met with Prince Charles last week at St James’ Palace in London to discuss the document that will be sent to governments and regulators.
Responsible Investor first reported the creation of the P8 group in December, 2007. A spokesman for the University of Cambridge Programme for Industry, which runs the Prince of Wales’ Business & the Environment Programme, said the Prince had participated personally in last week’s debate over the report’s content.
He said the investors were currently “finessing” the plan before final agreement by the middle of August. It is believed the proposals will be made public in October this year.The P8 group – actually ten pension funds: three from Europe, three from Asia, three from the US and one from Australia – is understood to include the Universities Superannuation Scheme, which runs more than £30bn in retirement money for thousands of active and retired UK higher education workers. Other members are ABP, the giant pension plan for Dutch civil servants, as well as CalPERS and CalSTRS, the two largest US pension funds, which manage the retirement pots of Californian civil servants and teachers respectively.
The action plan is expected to outline the scale and type of investment needed in companies specialising in renewable energy and carbon dioxide emission reduction technologies in order to meet international targets. It will then suggest how private investor capital could start to meet some of these investment objectives given the right legal framework.
In June, UK Prime Minister, Gordon Brown, announced plans to build up Britain’s clean power supply in order to reach the EU-imposed target of producing 15% of the country’s energy from renewable sources by 2020. He said it would require £100bn of investment from the private sector, which the government will encourage with financial incentives.
Globally, the amount of money needed to meet carbon reduction targets has been estimated in the trillions of dollars with pension funds considered a prime source of potential investment. Their long-term investment horizon is seen as ideal for investing early and consistently in the companies that will produce profitable clean energy solutions. Prince Charles has taken an increasingly personal interest in climate change issues and how they can be solved with the help of institutional financial capital in the last year.In September, 2007 he brought together a group of 37 UK insurance companies to launch ClimateWise, an initiative to tackle climate change and encourage responsible environmental behaviour by insurance clients.
Launching that inititiative, Prince Charles, said: “We have to think of this as if we were in a wartime situation. If you don’t believe it, just watch Al Gore’s film.”