The board of the United Nations Principles for Responsible Investment wrote an open letter to the heads of state that gathered at the climate talks in Copenhagen last week, claiming that the role of institutional investors is not being taken seriously in the fight against climate change.
The Copenhagen conference ended in controversy on Dec. 18 after world leaders failed to produce a legally binding treaty on the reduction of CO2 emissions.
Adding to the criticism, the board of the PRI, which represents more than 650 institutional investors who hold more than $18 trillion in assets, said in its Dec. 17 letter that the role of institutional capital had only taken a “tentative foothold” in the Copenhagen negotiations. It said this was despite estimates suggesting that at least 80% to 85% of the finance and capital required in response to the mitigation and adaptation needs of climate change would likely come from capital markets.
The PRI board said private investors needed “clear recognition” of their financing role in any eventual agreement coming out of Copenhagen, or from subsequent United Nations meetings planned for Bonn and Mexico in 2010.
The letter said Copenhagen had been sharply focused on public, overseas development assistance-type transfers from north to south. It said this had come partly as a result of highly sensitive fears among developing countries of possible reductions in public financing and aid-related commitments associated with climate change.
However, the PRI claimed that even in the “most optimistic of scenarios,” public money pledged by industrialized countries for developing countries beginning in 2013 would amount to only one-sixth to one-fifth of the capital required.
The letter, signed by Donald Macdonald, chairman of the PRI on behalf of the initiative's asset owner members, said the conference “has to deliver, therefore, an indication of how the remaining four-fifths of the required capital and finance will be mobilized.”
Hugh Wheelan is editor of Responsible Investor.