UN Secretary General Ban Ki-moon has invited leaders from government, finance, business and civil society to bring bold announcements and actions on climate change to the Summit. In response, a group of leading institutional investors – including two of the largest asset managers, and pension funds in Europe – have joined forces with the United Nations Environment Programme and its Finance Initiative (UNEP FI), to substantially reduce the carbon footprint of US$100 billion of institutional investment worldwide. Institutional investors are owners of large segments of the global economy. Therefore, it is expected that having a critical mass of them decarbonize their portfolios will send a strong and unequivocal signal to carbon-intensive companies that carbon-efficiency is now center-stage.
Co-founded by the UNEP and its Finance Initiative (UNEP FI), the fourth National pension fund of Sweden AP4, Europe’s largest asset manager Amundi and CDP, the most important mechanism for climate disclosure worldwide, the Portfolio Decarbonization Coalition (PDC) was announced today by AP4 CEO Mats Andersson during UN Secretary-General Bank Kimoon’s Climate Summit.
A growing number of investors from around the world recognize that GHG emissions are an unprecedented threat to economic stability and, therefore, to their portfolios and ultimate beneficiaries. In response, the PDC will convene a critical mass of investors committed to measuring and disclosing the carbon footprint of a minimum of $500 billion of investment.
Subsequently investors will commit to the PDC to substantially reduce their carbon footprint with an intermediate target of $100 billion by December 2015. As a result investors who join the Coalition will lessen their carbon exposure with regards to current annual emissions and potential emissions from current fossil fuel reserves.
The Coalition will reach out to institutional investors worldwide and it will be aided by the largest global network of investors focused on sustainable development – the UN-supported Principles for Responsible Investment (PRI) – as well as other relevant networks. Mats Andersson, CEO of AP4, said: “We are both proud and honored to receive the trust of the UN Secretary General to take the lead of this Coalition to support our peers in taking climate action. Climate change is more and more recognized as a financial risk and it is our duty, as trustees, to take concrete steps to reduce this risk.
“USD 100 billion is a significant amount but it is absolutely feasible. And we hope that by reaching this target, investors can show that a different course of action is possible, where institutional investors’ goals are aligned with, and support the common good,” he added. “Institutional investors often have long-term investment horizons and are diversified across the economy. They have an interest in the long-term stability of the whole system rather than the short-term performance of individual market actors. That is why avoiding disruptive climate change, a truly systemic threat, is of such intrinsic interest to them,” said Achim
Steiner, UN Under-Secretary-General and Executive Director of UNEP.
“For long institutional investors have been consistent advocates of ambitious climate-change policies. This Coalition, established by UNEP FI and key partners, now enables them to take concerted and ambitious action themselves, through their own portfolios,” he continued. Yves Perrier, CEO of Amundi, commented, “Amundi is honored to be part of this coalition which reflects its commitment to come up with practical advices to make sustainable finance a reality.” He added, “Finance can work for the good. And this association of climate leaders is an excellent illustration of our will to consistently support our clients interest, and take full responsibility in our role in society as a global financial entity.”
The PDC is also supported by the China International Capital Corporation whose Chairman, Jin Liqun, declared “CICC is committed to promote the decarbonization of investment portfolios and the use of low carbon indexes, particularly in Asia and in China.”
Also in attendance of the launch was Paul Dickinson, Executive Chairman, CDP, who said.: “For over ten years, CDP has been working with the world’s largest institutional investors to engage with companies on reducing emissions. This coalition represents the next logical step for investors as they look to reduce their carbon impact at a portfolio level. We fully support the initiative and look forward to equipping investors with our rigorous data to make the best decisions when managing the carbon footprint of their investments.”