Climate change poses a major long-term threat to institutional investments, and such funds must shift their portfolios from fossil fuels towards clean energy, UN Framework Convention on Climate Change executive secretary Christiana Figueres told an investors’ conference at the United Nations.
Figueres said the private sector must play a key role in ensuring that global temperatures do not rise by more than 2 degrees Celsius, the limit UN scientists say is necessary to prevent catastrophic climate change, Reuters reports.
Some institutional investors have already taken steps to reduce the GHG emissions of their portfolios. For example, pension funds including the California State Teachers Retirement System and the New York State and New York City Comptrollers’ Offices have filed shareholders’ resolutions related to climate change. In June, some 22 US investment firms with about $240 billion in assets under management, led by CalSTRS and the Oregon State Treasurer’s office, signed the Climate Declaration, calling upon federal policymakers to address climate change as an economic opportunity.
And last year 70 investors including California’s two largest public pension funds sent letters to top oil, gas, coal and power companies asking for information on the companies’ exposure to potential climate change regulations.
But while Mercer says a majority of investors view climate change as a material risk, the United Nations Environment Programme Finance Initiative argues that they need to do more. Institutional investors should start measuring, disclosing and reducing greenhouse gas emissions associated with their portfolios to reduce policy, regulatory and financial risks associated with these emissions, according to a briefing by UNEP FI and investors including Allianz, HSBC, Pax World Investments and Trillium Asset Management.
Takeaway: UN climate chief Chrisiana Figueres says institutional investors must tackle global warming by shifting their portfolios. While some funds have taken steps to address climate change, the UN argues they must do more.
Tamar Wilner is Senior Editor at Environmental Leader PRO.