Investors With $25 Trillion Detail Opportunity in Climate Change

President Hollande And Chancellor Merkel
Renewable energy investment hit a record $310 billion last year, according to data compiled by Bloomberg. Photographer: Tobias Schwarz/AFP/Getty Images

As more than 1,000 executives gather in Paris to discuss their response to climate change, a group of investors managing $25 trillion opened a web portal detailing the action being taken to cut pollution.

Four investor groups representing 265 institutions worldwide joined the United Nations Environment Program in opening a web portal that will show which projects gained finance to rein in global warming.

The move reflects a shift in the business community toward embracing the inevitability of stricter regulations on fossil fuels and more incentives for cleaner forms of energy. French President Francois Hollande, whose nation in December hosts the culminating round of UN talks aimed at the first-ever emissions limits that will apply in all countries, said executives need to recognize the rewards they can reap from the shift.

“Climate change is a menace, but it is also an opportunity to prepare the switch to a non-carbon energy future,” Hollande said in Berlin at a meeting with environment ministers and German Chancellor Angela Merkel. The UN effort, he said, represents the “last hope for a framework for energy transformation.”

Hollande’s appearance, along with the announcement from investors and the forum for executives in Paris beginning Wednesday, are part of the UN-led push to boost ambitions for the climate discussions later this year.

Warming Records

With greenhouse gases and the world’s average temperature both at record levels, more than 190 nations are negotiating on a deal that would replace the fossil fuel limits set out for industrial nations in the 1997 Kyoto Protocol. Their aim is to keep global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) by the end of the century, a shift that remains the quickest since the last ice age ended some 10,000 years ago.

Investors and companies that once sought to block new climate regulations now are supporting the process. The French oil major Total SA and Norway’s state oil company Statoil ASA are among those who will attend the meeting in Paris.

“Investors are working hard for a low carbon transition,” said Stephanie Pfeifer, chief executive officer of the Institutional Investors Group on Climate Change in Europe, which represents 100 firms managing 10 trillion euros ($11 trillion). “An ambitious global deal which sets a clear pathway towards a low carbon future would enable them to scale up these actions and go further.”

Berlin Meeting

In Berlin, Merkel said climate change is an “opportunity” for those willing phase out fossil fuels and shift to cleaner forms of energy. Her country is in the process of scrapping nuclear reactors, providing incentives for solar and wind farms to make up the difference.

“We have to achieve the decarbonization this century,” Merkel said. “It will be decisive how we can channel global investments into a climate-friendly path” and those investments, she said, can be possible “without sacrificing economic growth.”

Renewable energy investment hit a record $310 billion last year, according to data compiled by Bloomberg. That’s short of the $1 trillion or more that the International Energy Agency says is necessary between now and 2050 to keep the planet from overheating.

The investors groups said their web portal is the first to record the wide range of projects obtaining finance. The site on Monday showed 17 separate projects spanning 30 countries, backed by 400 investors.

‘Scaled Up’

“The steps investors are taking today can be scaled up tremendously in the future with a strong climate deal,” said Chris Davis, chief of staff for the Investor Network on Climate Risk organized by Ceres, a Boston-based consultant advising 110 investors with $13 trillion of assets on sustainability issues.

The portal tracks how money is being reallocated toward low-carbon forms of energy and away from “emissions intensive” energy forms, according to a statement from the investors. It also shows how fund managers engage with fossil fuel companies and gives a way for companies to measure carbon pollution.

“The market for different investor responses to climate change is growing rapidly,” said Nathan Fabian, CEO of the Investors Group on Climate Change in Australia and New Zealand, which brings together 55 funds with $1 trillion. “This platform explains what investors are doing now.”

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