Many of the largest US pension fund managers gathered at the United Nations last week to discuss the risks and opportunities climate change poses to their investment portfolios. Institutional investment fund managers, like those in charge of pension resources, are in the difficult position of finding opportunities that provide returns needed to support beneficiaries for decades, while also balancing the “existential risks” associated with climate change.
The “stranded asset” concept dominated the agenda at the Investor Summit on Climate Risk: Financing the Clean Energy Future Co-hosted by the UN and Ceres, a non-profit that seeks to align successful business with sustainability. Stranded asset risk is the idea that mandated carbon emissions reductions could leave fossil fuel-heavy businesses without a market for their products, or at least impact their business to the point where it’s no longer attractive to investors due to sub-par returns. Over 550 participants – who collectively manage trillions of dollars – attended.
“We are here to marshal a [climate change] response and leverage the trillions of dollars in this room,” said Ceres president Mindy Lubber during opening remarks.
The IEA estimates $35 trillion will be needed by 2030 to address climate change impacts, Lubber said, and getting the investment community on board will be the key to inking a new worldwide climate deal in Paris in 2015 at the 21st session of the Conference of the Parties to the UN Framework Convention on Climate Change.
A major climate summit will also be held at the UN this September in preparation for COP 21.
Former Treasury Secretary and Co-Chair of the Council on Foreign Relations Robert Rubin said a political solution is needed, but elected officials only act when driven by an informed electorate, which we don’t have today.
Billionaire investor and climate activist Tom Steyer agreed, saying he believes his coalition can force political action on climate change, but getting business on board is a crucial component of his strategy.
Steyer is largely credited with drawing a link between climate change and the proposed Keystone XL Pipeline and helping to elevate the debate to the highest levels of US politics.
Credible people in the eyes of elected officials are those who run P & L and employ people, he said. “They can walk into elected officials’ offices and get results.”
Steyer said he’s helping fund a major peer-reviewed study on the economic impacts associated with climate change that should be released mid-2014.
“You have to give this [climate change risk] concreteness and the way to do that is with the study Tom is doing,” said Rubin.
Steyer said a local, grassroots political approach is most likely to succeed in driving climate legislation at higher levels of government. “The fact is a coalition needs to be one of local interests.”
Modifying a quote from A Farewell to Arms, Steyer said, “The way to win [on climate change policy] is very slowly and very locally, then all at once.”
