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Investors call for strong global climate change treaty

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The world’s largest global investors have issued a joint call for strong action this year from international policy makers in the fight against global warming.

The world’s largest global investors have issued a joint call for strong action this year from international policy makers in the fight against global warming.

Amid the growing focus on upcoming international climate treaty talks, global investors meeting at a climate change forum in New York issued a major policy statement calling for a strong and binding international treaty that will reduce pollution and catalyse massive global investments in low-carbon technologies.

Signed by 181 investors collectively managing more than USD13trn in assets, the statement is the largest of its kind on climate change in history.

Coordinated by four investor groups on climate change, the US-based Investor Network on Climate Risk, the European Institutional Investors Group on Climate Change, the Investors Group on Climate Change in Australia and New Zealand and the United Nations Environment Programme Finance Initiative, the statement formalises the private sector’s requirement for a strong, binding framework to succeed the Kyoto Protocol. 

Investors released the statement at an all-day international investor forum on climate change hosted by New York State Comptroller Thomas P. DiNapoli and keynoted by British economist Lord Nicholas Stern. 

‘Unmitigated climate change poses a threat to the global economy,’ says Stern. ‘But building a low carbon economy creates opportunities for investment in new technologies that promise to transform our society in the same way as the introduction of electricity or railways did in the past.’

The statement calls for the following elements to be included in a global climate change treaty.

• A global target for emissions reductions of 50-85 per cent by 2050 (1990 baseline)
• Developed country emissions reduction targets of 80-95 per cent by 2050 with interim targets of 25-40 per cent by 2020 backed up by effective national action plans
• Developing country action plans that deliver measurable and verifiable emission reductions
• Government support for energy efficient and low carbon technology
• Measures that support the move to an effective global carbon market, including ambition caps, fair and efficient allocation of allowances and links between different trading schemes
• Revisions to the Clean Development Mechanism to ensure real, permanent and verifiable emission reductions
• Public financing mechanisms that leverage private sector finance for investment in developing countries
• Measures to reduce deforestation and promote afforestation
• Support for adaptation to unavoidable climate change impacts

"Climate change has quite rightly been framed as the greatest market failure ever. The magnitude of the negative economic impacts and the potential of climate change to bankrupt our global financial system, as well as to threaten the planet’s life supporting natural ecosystems, are chilling,’ says Rob Tacon, chair of UNEP Finance Initiative. The financial services community in general, and long-term institutional investors in particular, can play a critical leadership role in ensuring that capital at scale is directed to the emerging clean, green, low carbon economy that will underpin the most vibrant industries of the future.’

The forum comes in advance of key negotiations in Copenhagen this December to ratify a new international climate change treaty after the Kyoto Protocol expires in 2012. The outcome of those climate talks depends heavily on the course of debates in the US Congress on climate and energy legislation. The House passed a bill in June and Senate consideration of a similar climate bill is expected to begin within weeks.

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