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Investors Ask Government to Face Up to Climate Change
By Sara Laks

First Affirmative joined 180 like-minded investment institutions representing more than $13 trillion in releasing a statement on Sept. 16, 2009 calling for an international treaty to address global warming. This initiative is the largest showing of this kind from the investment community in world history.

The policy statement from the Investor Network on Climate Risk (INCR) recognizes the dangers that climate change holds for investors, as well as the valuable investment opportunities presented by mitigating technologies.

“Unmitigated climate change poses a threat to the global economy,” said Lord Nicholas Stern, chair of the Grantham Research Institute on Climate Change at the London School of Economics. “But building a low carbon economy creates opportunities for investments in new technologies that promise to transform our society in the same way as the introduction of electricity or railways did in the past.”

Private capital has a significant role to play in the transformation needed to develop a truly sustainable economy. But uncertain political backing is preventing much of this needed investment until governments commit resources and adopt legislation to create the necessary market conditions.

The coalition of investors endorsing this statement is working to pressure leaders in Washington, DC not to delay in passing cap and trade legislation this fall. Bills such the American Clean Energy and Security Act of 2009 (also known as the Waxman-Markey bill), if signed into law, would allow the market to set a price on carbon and give business confidence to invest in green energy services and technologies.

The course of the debate on this legislation will set the stage for the December 2009 negotiations in Copenhagen to ratify a new international climate change treaty pending the expiration of the Kyoto Protocol in 2012.

The power of the market, if harnessed to combat climate, may be the most commanding weapon we have to wield in the battle. But we need government to help calibrate the strategy. As we have learned the hard way many times, the hand of the free market must be guided. After all, Adam Smith only claimed the free market was efficient in the short run; and we’re running out of time to develop our strategy for the long-run.

Mindy S. Lubber, president of Ceres and director of the INCR, puts this momentous event in context of the work that still needs to be done. "The successes of institutional investors have been laudable, but they are a mere drop in the ocean of what we have to accomplish,” she explained. “Investors need policies that create stable market conditions. Political leaders need to have the courage to act."

Sara Laks, Assistant to the President
saralaks@firstaffirmative.com

Posted: September 28, 2009