Responsible Investment

Global investors promote action against climate change at Doha

December 4, 2012

The 2012 UN Climate Change Conference is ongoing at Doha, Qatar. The meeting includes the 18th session of the Conference of the Parties (COP 18) to the UN Framework Convention on Climate Change (UNFCCC) and the 8th session of the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP 8). The Conference is running from 26 November-7 December 2012. While different countries once again negotiate about what they will and will not yet do, more and more global business leaders are stepping up to the plate. The slow progress toward a global policy framework is increasingly seen as a business risk.

Global Business Day

At the Global Business Day, the World Business Council for Sustainable Development (WBCSD) and the International Chamber of Commerce (ICC) brought together hundreds of members of the business community from developing and developed countries, and representatives from governments, NGOs and multilateral organizations. They wanted to create an opportunity for businesses to explore their role in addressing climate change and share knowledge of how to engage governments more effectively and build trust between the two groups. The WBCSD is a CEO-led, global coalition advocating for progress on sustainable development, representing more than 200 companies in all business sectors and continents with a combined revenue of more than $7 trillion. Each year, the Business Day focuses on different themes.

On 3 December in Doha, where the beginnings of a post 2020 agreement are being sown, WBCSD and ICC aimed to keep up the momentum for climate action as an integral part of business strategy. Business Day looked ahead at the business perspective of diversifying the energy mix by 2050 in the framework of global green growth, and the essential drivers to keep moving towards a global low-carbon economy. The afternoon focused on the opportunities for green growth in the Middle East.

Investor groups' “call for action”

According to the 2012 International Energy Agency World Energy Outlook announced last month, current policies and recent trends will lead to long-term average global temperature increase of 3.6°C. This is a level which scientists have suggested could cause catastrophic and irreversible changes to the global ecosystem. A growing number of CEO’s are sticking their heads above the parapet and are actively leading the way towards a business strategy shift towards a long-term horizon, sustainable economy. They reject the idea that fiduciary duty compels them to focus on maximizing profits for their shareholders in the short-term. At the start of Doha, groups representing the world’s largest investors today published an open letter addressed to governments of the world’s largest economies calling for a new dialogue on climate change policy in order to avert dangerous climate change and its resulting economic impacts.

The letter calls for: - Clear, consistent and predictable policies that encourage low carbon investment; - Knowledge sharing between governments on effective climate and clean energy policies, building on successful existing national and regional measures; -Stronger international agreements that send clear market signals about the future of climate policy and reductions in greenhouse gas emissions. The letter was prepared by the European Institutional Investors Group on Climate Change (IIGCC), the North American Investor Network on Climate Risk (INCR), the Australia/New Zealand Investor Group on Climate Change (IGCC), the Asia Investor Group on Climate Change (AIGCC) and the United Nations Environment Programme Finance Initiative (UNEP FI). It is also supported by the UN-backed Principles for Responsible Investment Initiative (PRI).

Drawing on investor experience, the letter outlines the key features of successful climate change and clean energy policy which attract low-carbon investment. These include clear short term, medium term and long-term greenhouse gas emission reduction targets with timetables for these targets alongside enforceable legal mechanisms. Also, the organizations propose incentives to shift the risk/reward balance away from high-carbon in favor of low-carbon investment. In the letter, the four regional climate change investor groups – IIGCC, INCR, IGCC and AIGCC – also announced the formation of the Global Investor Coalition on Climate Change (GIC) to represent the international investment community on climate change policy and investment issues at a global level. The GIC, which will be working closely with other networks including UNEP FI, PRI and the Carbon Disclosure Project (CDP), will provide a focal point for engagement with international policy-making bodies.

“Forward-thinking” businesses

Not only tackling climate change, but also the pressures on the environment caused by population growth and the depletion of natural resources have become concerns for “forward-thinking businesses”, according to WBCSD President Peter Bakker. Last month, WBCSD presented the report “Picking up the Pace – Accelerating public policies for positive outcomes”[1] for the 10th Conference of the Parties (COP) of the Convention on Biological Diversity (CBD). In the publication, Peter Bakker stresses businesses need “to accelerate positive outcomes for biodiversity and ecosystems. Business needs to start managing its natural capital, while governments need to provide the policies and frameworks within which this is possible.” The report provides case studies in different countries that illustrate how policymakers and regulators have already been able to create enabling environments to mobilize private sector action to address the loss of biodiversity. Cases include subsidy reforms, tax and fiscal incentives and payments and markets for ecosystem services, and mitigation hierarchy & biodiversity offsets.

References

  1. World Business Council for Sustainable Development. "Picking up the Pace – Accelerating public policies for positive outcomes". WBCSD, October, 2012.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Global investors promote action against climate change at Doha”, Ingrid Ramaan, FSinsight, December 4, 2012.

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Author(s)

Ingrid Ramaan
Administrative Editor FSinsight

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