Institutional investors pledge action on climate change

London, 5 October: European institutional investors managing assets worth more than £850 billion ($1.6 billion) have collectively agreed to put pressure on governments and companies to reduce emissions of greenhouse gases.

The Investor Statement on Climate Change, signed by 15 institutions including Hermes, Insight Investment, BNP Paribas Asset Management, Morley Fund Management and the Universities Superannuation Scheme, says "climate change presents a series of material business risks and opportunities – for investors and companies – to which investors must respond."

Today's investment decisions "will have a major impact on current and future global greenhouse gas emissions, and hence on the world's climate." These changes "will impact upon the companies and assets in which we invest", the statement adds.

Therefore, the signatories say, we will "explicitly consider climate change risks and opportunities in our investment analysis" and "engage with the companies in which we invest to ensure that they are minimising the risks and maximising the opportunities presented by climate change and climate policy".

In addition, the institutions have pledged to "use our individual and collective influence to encourage governments to adopt policies that provide incentives to reduce greenhouse gas emissions".

The statement also says pension funds should consider climate change issues when appointing asset managers and calls on investment consultants to factor climate change issues into the advice they give to pension funds.

The Institutional Investors Group on Climate Change, which sponsored the statement, plans to publish an annual report detailing the actions that have been taken by the signatories towards achieving the statement's goals.

The initiative follows hard on the heels of the Carbon Disclosure Project 2006 in which 225 investment institutions, with more than $31 trillion in assets, called on more than 2,000 companies worldwide to reveal how climate change is affecting them and how they are responding to the associated threats and opportunities (see Environmental Finance, September 2006, page 5).

See www.iigcc.org