Institutional Investors Push Carbon Tax to Fuel Clean Energy and Efficiency

Prior to the UN Climate Summit in New York today, 348 institutional investors from around the globe managing over $24 trillion in assets released a statement on Sept. 18 urging governments to institute more aggressive policies to drive greater investment in clean energy, energy efficiency, and green infrastructure.

They urged governments to reach an agreement on climate change by the end of 2015 to coincide with the UN’s Climate Change Conference set to take place in Paris. It’s widely hoped that governments will create a legally binding agreement on climate policies.

The investor’s key goal, according to the statement, is to close the gap between the $1 trillion per year that the International Energy Agency has stated needs to be invested by 2050 to avoid the worst impacts of climate change on the environment, and the current $254 billion that was invested in clean energy in 2013.

The investor group includes a wide range of U.S. institutional investors: BlackRock, CalPERS, CALsters, Rockefeller Asset Management, Russell Investments, TIAA-CREFF, Pioneer Investments, Illinois State Board of Investment, Apollo Management, Calvert, and Standard Life Investments.

Specifically, the group states that it wants governments to put a price on carbon and roll out new policies to support clean energy and energy efficiency. Additionally, the statement urges more government financing for clean energy research and development, support for the deployment of low carbon technologies, and a plan to phase out subsidies for fossil fuels.

On their side, the investors committed to making further investments in “low carbon assets” that meet their risk and return objectives, further develop their capacity to evaluate these types of investments, work with the companies they invest in to ensure they disclose climate-related risks, and issue reports on the investments they’ve made in clean energy, energy efficiency, and green infrastructure.

The investor groups that came together to issue the statement included Ceres’ Investor Network on Climate Risk (INCR) in the U.S., the European Institutional Investors Group on Climate Change (IIGCC), the Investors Group on Climate Change (IGCC) in Australia and New Zealand, and the Asia Investor Group on Climate Change (AIGCC).

Additionally, the group started a “Low Carbon Investment Registry” that tracks specific examples of low carbon investments, with 45 institutional investors in 205 investments worth $24 billion being tracked so far.  The top investments being made by these investors were in clean energy projects (44%), investments in private equity funds that target low carbon activities (24%), direct investments in energy efficiency and green buildings (15%), and investments in agriculture and forestry (8%).

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