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United Nations, Major Investment Firms Call for Increased Focus on Carbon Risk Management and Carbon Accounting
By Robyn Taylor Knapp

The United Nations Environment Programme Finance Initiative (UNEP FI) has issued an important Investor Briefing that explains why and how institutional investors should start measuring, disclosing, and reducing the greenhouse gas (GHG) emissions associated with their investments and investment portfolios.

Extreme weather events today are frequent, intense, and are changing public perceptions around climate change. The concentration of CO2 in the Earth’s atmosphere has surpassed 400 parts per million for the first time in several million years. The signal is now very clear: It’s urgent that we transition to a low-carbon economy—and fast.

Recent data shows that a global landscape of policies to reduce/cap GHG emissions continues to emerge nationally and sub-nationally. These regulations will increasingly impact business profitability. With the current lack of global regulation on climate change, there will likely be more sudden and radical policy interventions in the future. The prioritization of GHG emissions on both the public and private level will sharpen as the physical impacts of climate change continue to increase and intensify along with undoubtedly disruptive economic consequences.

“Investors can play a key role in re-allocating capital to the low-carbon economy at the needed scale,” said Julie Gorte, Senior Vice President for Sustainable Investing, Pax World Management, and Co-Chair of UNEP FI’s Asset Management Working Group. “The gradual decarbonization of investment portfolios is critical for the transition to a low-carbon economy; importantly, it does not have to be inconsistent with investors’ fiduciary responsibilities.”

Investors are key players in the effort to close the ‘funding gap’ for sustainable energy infrastructure on a global scale. Investors can also go beyond the issue of infrastructure finance, as they are owners and creditors of large segments of the global economy. UNEP FI argues “that carbon footprinting is one of several key tools that investors should use to understand, assess, and mitigate portfolio carbon risk.”

Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is no guarantee of future results.

Posted: September 3, 2013