PRESS CONFERENCE ON GLOBAL PRIVATE INVESTMENTS AND CLIMATE CHANGE

General Assembly President Srgjan Kerim said today that fostering a closer dialogue between private investors and public decision makers was key to boosting investment in energy efficiency and clean energy technologies required to tackle climate change.

As for the importance of bringing together private investors and Member States, Mr. Kerim said during a Headquarters press conference on the Assembly’s informal debate on global investments and climate change that nearly 90 per cent of the global financial flows needed to respond to global warming would not come from bilateral donors or multilateral organizations, but from private investment.

He was joined by Mindy Lubber, President of Ceres, the Boston-based coalition of investors and environmental leaders working to improve corporate environmental, social and governance practices, who called for tougher scrutiny of carbon-intensive investments that may pose long-term financial risks.

Mr. Kerim said that investments of at least $45 trillion might be needed over the half-century to prevent energy shortages and greenhouse gas emissions from slowing economic growth.  “We don’t want climate change to be reduced to only an environmental issue.  It is rather an issue of sustainable development,” he continued, stressing that the focus, therefore, should be on investing in innovative new technologies that could drive long-term economic growth.

He went on to say that six years ago, a group of financial institutions released a study predicting that by 2012, the annual global economic losses from extreme weather events and natural disasters would approach $150 billion a year.  That meant that insurers and banks might be put at risk of insolvency, and that was why they were interested in the Assembly’s current talks.

So climate change must be as much about dealing with risks as taking advantage of the opportunities, he added, saying that one important impact was in the area of job creation in low-carbon sectors -- “green jobs” -- energy efficiency projects, including in construction and retrofitting of energy inefficient buildings, as well as sustainable transport.

Ms. Lubber, who also directs the Investor Network on Climate Risk, said that climate change was today’s most compelling environmental national security public health and economic problem, and the public and private sector must unite to address it comprehensively.  Investors, banks and public pension funds had gathered to find ways the investment community could be an active player in the debate.  The issue was so compelling that investors could not stick to the same old line:  We don’t do investment policy.  We’ll just wait and see what happens and invest where the money is.

“We’re working against a backdrop of estimates calling for 70 or 80 per cent reduction in carbon emissions by 2050, and that will not happen with just talk or just thinking about climate change as an environmental issue that we can take our time in dealing with,” she said.  The risks posed by global warming could not be ignored, she said, drawing parallels to the current mortgage and credit crunch hamstringing the United States’ economy.  “We knew about that risk and we ignored it.  Now it has devastated the economy here in the United States and beyond.  Climate risk is equally as evident and we ignore it at our peril,” she warned.

Ceres had brought together investors -- from asset owners to asset managers -- to consider proactive and innovate responses, including more and, ultimately, mandatory, disclosure, requiring companies to study, analyse and reveal their climate risk.  That was important because “what gets measured gets managed better”, and it would give investors critical information about climate risks when they considered where to put their money.

Further, ramping up investment flows -- from venture capital to private equity and hedge funds to the clean technology sector -- was absolutely necessary, she said.  To be able to reduce our carbon emission by 80 per cent by 2050, investment must be heavy in areas that would drive a radical transformation in energy and transportation infrastructure, as well as in building and architecture schemes.  “Those that are in the game early, in terms of smart investments in clean technology are those who are already starting to see returns,” she said.

Good governance was also necessary because investors were now concerned about whether companies they wanted to build their portfolios around were doing enough to address climate change and other sustainability issues at the corporate board level, she said.  The issue was so pressing that investors believed that senior company officials must be involved.  Some investors had begun filing “global warming” shareholder resolutions.  In the United States for instance, investors were calling on Wall Street to do more studies on climate change, as well as urging their analysts to ask the right questions on risks versus opportunity on quarterly earnings calls.

She said that the boldest step had been the emergence of investors weighing in on public policy by calling for mandatory regulations on climate policy, putting a cap on carbon emissions and putting a price on carbon.  Because the current system was so haphazard and distorted, investors were saying that, in order to jumpstart the market for investment and opportunity, companies needed to create certainty and a level playing field.

She said that investors in the United States were calling on companies to follow the policy guidelines for mandatory carbon caps and pricing set by the European Union, not just because that was the right thing to do, but because it would send the right market signal to finally jumpstart the “green economy”, create jobs, and provide investors with certainty about investing in a clean technology future, she said, adding, “We’ve reached a critical mass in words, now its time to reach critical mass in deeds.”

Responding to questions, she said that, while companies were getting better about disclosing their climate risk, such moves had been uneven and inconsistent, sector-wide.  Here, she stressed that, in the United States, the Securities and Exchange Commission (SEC), which was charged with protecting investors, had an obligation to be very clear that climate risks in hundreds of publicly-traded companies was very real, so that investors were not making decisions “with one eye closed”.

Ceres was not asking the Commission to pass new regulation, nor was it requesting major statutory changes from Congress, she explained.  It was asking for an “interpretive memorandum” telling companies and others that climate change was a material risk.  Ceres and its partners had filed a formal petition this past September requesting that the Securities and Exchange Commission mandate disclosure of climate risk.  The Commission had not moved on the request and Ceres planned to file an amendment to its petition in the coming weeks.  “Hopefully they will see that this is not about knee-jerk regulation […] this is about clear and important information to let investors do their job.”

On the current energy crisis, Assembly President Kerim said that, while soaring oil prices were affecting society at all levels -- food prices, transport costs, agriculture, material costs, among others -- it also stimulated thinking about alternative energy sources.  Renewable energy now accounted for about 14 per cent of energy use, so there was a lot of potential for bolder steps, especially in wind and solar energy, and in the provision of jobs.

He said that investing in that sector would lead to a host of economically viable solutions because, at the end of the day, people would realize that renewable energy could handle the same tasks cheaper and more efficiently, while also create new jobs.  Ms. Lubber added that high oil prices would also force changes in consumption patterns as people started buying smaller cars and sought out clean energy products and solutions.

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