where checking accounts rebuild communities
Back to homepageInstitutional ReportsSRI Financial Professionals DirectoryToolsNewsSRI Performance and TrendsAbout Us   

January 15, 2016
Sustainable Investors Respond to Climate Pact
    by Robert Kropp

With COP21 Climate Conference in Paris ending with agreement intended to keep global temperature increase below two degrees Celsius, investors envision portfolios focused on renewable energy. First in a three-part series.

For as long as sustainable investment has been a mainstream strategy, its practitioners have emphasized the necessity of supportive government policy to encourage the transition to a low-carbon economy. Without effective policies in place, institutional investors have argued, the risk of moving significant amounts of investment dollars into renewables is simply too great.

While the devil remains in the details, last month's agreement at the COP21 climate conference was greeted with enthusiastic welcome by many institutional investors. If, as government negotiators agreed, global temperature increases are to remain below two degrees Celsius, and greenhouse gas (GHG) emissions are to be net-zero by mid-century, then the timing of the low-carbon transition is an especially urgent aspect of the struggle to contain the worst effects of climate change. Not only must almost all of the reserves already on the books of fossil fuel companies remain in the ground, and the ongoing subsidizing of those companies end; heretofore unrealized investment in alternate clean energy technologies must be made, starting immediately.

In a
blog post at Ceres, Christopher Fox noted two especially important outcomes of the Paris conference. National climate commitments have been submitted, he wrote, by 187 nations representing 98% of global GHG emissions. And “finance flows consistent with a pathway towards low greenhouse gas emissions and climate resilient development” were agreed to as well, meaning that “governments have agreed to mobilize at least $100 billion in public and private finance for clean energy and climate resilience projects from 2020 to 2025 and agreed to go beyond this level after 2025,” Fox wrote.

“The level of $100 billion through 2025, will be the floor for support from developed countries for aid to help poor countries mitigate and adapt to climate change,” Christina Herman wrote
in a blog at the ICCR website. “After 2025, governments will adopt a new, higher, collective goal, though the extent to which finance will increase, and who will mobilize it, is a significant outstanding question.”

Ceres president Mindy Lubber, who attended the talks in Paris,
stated following the agreement, “This historic agreement sends a spark, a signal, that the low-carbon global economy has officially arrived. Given the global reach of the agreement and the follow-up mechanisms and transparency behind it, I’m hopeful we could see trillions – not just billions – pouring into the low-carbon economy worldwide every year.”

Nevertheless, even the most hopeful of sustainable investors recognize that the COP21 agreement, while historic, represents commitments that are yet to be put into action. In fact, one could argue that the failure of governments to reach such an accord in years past requires all climate activists to advocate all the more for meeting commitments; and sustainable investors themselves must cooperate in taking the lead by moving more investment into the low-carbon transition.

“Science tells us that emissions of greenhouse gases, principally carbon dioxide emitted by the combustion of fossil fuels, need to peak by 2020 and come down 6-10% every year after that,” Herman of ICCR wrote. “We will need companies, communities and governments to work together to decarbonize the economy as quickly as possible, and put in place protections for vulnerable communities subject to climate change impacts that cannot be prevented.”

“Far more work is needed by governments, the private sector and other parties to turn this document into significant on-the-ground action. We must all collectively hold ourselves accountable for bringing this agreement to life,” Lubber of Ceres stated.

In a
blog post at Forbes, Lubber outlined some measures that must be taken to realize the low-carbon transition.

“From stranded carbon assets and 2-degree stress testing to nominating climate-competent board directors and eliminating fossil fuel subsides, businesses and investors are all talking in lock-step about a top-to-bottom transformation in how our economic system factors climate risks and opportunities into daily decision-making,” Lubber wrote.

Next: In wake of COP21, shareowners file resolutions addressing lobbying against climate regulations by fossil fuel companies.


| Reports | SRI Financial Professionals Directory | Tools | News | SRI Performance and Trends | About Us | Contact
© SRI World Group, Inc. - All rights reserved
Terms of use - Privacy Policy - OneReportTM Network