Ceres, director of the Investor Network on Climate Risk (INCR), “a network of 100 institutional investors with collective assets totaling about $10 trillion,” informed us of the above, yesterday, as 450 global investors controlling tens of trillions of dollars from four continents gathered at the United Nations offices in New York City for the Investor Summit on Climate Risk & Energy Solutions.
“Climate change is certain to be a major factor in investments for the foreseeable future—perhaps the biggest investment factor of our lifetimes,” said Kevin Parker, global head of Deutsche Asset Management.
Some key news and points made at the NYC summit include:
- 45 new, carbon-reducing policies were adopted around the world in 2011
- reportedly, only 4 negative policy actions were taken (not sure how they qualified such actions)
- $260 billion was invested in clean energy in 2011, according to Bloomberg New Energy Finance (5% more than the $247 billion invested in 2010, the previous record, and 5 times more than was invested 7 years ago)
- 36% increase in solar power investments (reaching $136.6 billion) in 2011
- US overtook China in clean energy investment for the first time since 2008 (important note on US investments below this list)
- US investments hit a record $55.9 billion, 35% more than last year
- China investments were $47.4 billion, 1% more than last year
- At the summit, “investors signed onto an action plan calling for greater private investment in low-carbon technologies and tougher scrutiny of climate risks across their portfolios.”
- “Investors also announced new guidelines on how companies should be boosting their attention to climate risks and opportunities – and promised much closer scrutiny of companies that ignore them.”
- “Renewable portfolio standards in 29 U.S. states represent a $400 billion investment opportunity, with much more possible if other states move in that direction.”
There was one important note made regarding US clean energy investments: “before anyone in Washington celebrates too much, the US figure was achieved thanks in large part to support initiatives which have now expired,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance.
Liebreich also noted: “The performance of solar is even more remarkable when you consider that the price of photovoltaic modules fell by close to 50 percent during 2011, and now stands 75 percent lower than three years ago, in mid-2008.”
“Investors are acutely aware of climate impacts on the global economy and corporate bottom lines,” said Jack Ehnes, CEO of the California State Teachers’ Retirement System (CalSTRS), the nation’s second largest public pension fund managing $146 billion in assets. “As a matter of fiduciary duty, we must elevate our attention and action on this huge issue. That means improving our own practices and making sure companies we own are doing the same.”
Yes, climate change affects companies’ bottom lines. It affects nearly everyone’s bottom lines. And the only way to be fiscally responsible in this case is to move the world towards a low-carbon economy.
It seems there was a definite sense of urgency at the conference, to not sit pretty with record investments and 45 positive policy actions, but to push for the much stronger policies and much more investment in clean energy.
“Our global carbon footprint is growing and our climate is discernibly changing,” said Mindy Lubber, president of Ceres, which organized the Summit along with the United Nations Foundation and the United Nations Office for Partnerships. “We need leaps, not baby steps, in tackling this colossal threat. And we need them now, not next year.”
A report from Deutsche Asset Management also summarized the ups and downs of the year, especially noting some of the now-expired US policies again.
Deutsche Asset Management released, “2011: The Good, The Bad, and the Ugly” at the Summit. It described generally mixed results on climate investments and policy in 2011 but projected the long-term growth in cleaner energy markets to continue.
Positive trends included China and Germany’s continued low-carbon leadership, the US Environmental Protection Agency’s issuance of new rules on hazardous air pollutants, Australia’s new carbon legislation, and Japan’s commitment to supporting the deployment of more renewable energy. Meanwhile, the international climate negotiations at Durban surprised the world by setting a schedule for negotiating a new “protocol” covering all countries, developed and developing, by 2015 – with binding targets to occur from 2020. They further noted that clean energy infrastructure and Venture Capital/Private Equity investing were still strong in the first three quarters of 2011.
The Deutsche report also highlighted negative trends such as the weak performance of cleantech public equity stocks in 2011 and the expiration of several US federal renewable energy incentive programs, including the “highly successful” Treasury Grant Program that expired Dec. 31, 2011. The report noted that the TGP program, in 2½ years, leveraged nearly $23 billion in private sector investment for 22,000 projects in every state across a dozen clean energy industries.
Ceres head Mindy Lubber sums the big picture up rather well in this statement to the attendees: “The clean energy economy is coming—whether via severe crisis or, alternatively, via the unleashed human ingenuity that can forestall that crisis. You in this room have a lot to say about which option we choose.”