Institutional investors and international organizations are coming together to get energy companies to divest from carbon-based investments and governments worldwide to stop subsidizing fossil fuels.
The new activity came as the United Nations convened a summit on Sept. 23 calling for a reduction of the carbon investments and shifting more to green investments.
A group of global asset owners and other institutional investors called for phasing out governmental subsidies for fossil fuels and for governments to compel carbon pricing. That pricing would add risks of climate change implications to the value of fossil-fuel assets, making investments in a green economy more competitive and contribute to meeting challenges from climate change.
In separate moves, APG Asset Management, CalSTRS and the University of California each plans to step up green investments by a combined $4.6 billion.
The e16 billion ($20.4 billion) L'établissement de Retraite additionanelle de lat Fonction Publique, a Paris-based public pension fund, announced Sept. 25 plans to divest carbon-intensive companies from a e750 million index fund.
On Sept. 22, the $860 million Rockefeller Brothers Fund, New York, announced plans to divest its fossil-fuel holdings, which total $56 million to $57 million or about 6.5% of the total fund and includes stock in Exxon Mobil Corp., Chevron Corp, and BP PLC, said Stephen Heintz, fund president.
The $298 billion California Public Employees' Retirement System, Sacramento, on Sept. 25 committed to mapping the carbon footprint in its investment portfolio, starting with equities, by December 2015, said a statement from CalPERS. It pledged to develop an engagement strategy and/or set portfolio carbon footprint reduction targets.
“These things have a snowballing effect,” said Christopher C. McKnett, vice president, State Street Global Advisors, Boston, who heads its global environmental, social and governance investments business.
David Pitt-Watson, chairman, U.N. Environment Programme Finance Initiative, and senior strategic adviser at Inflection Point Capital Management, said at a teleconference of institutional investors in advance of the summit: “Investors are calling ittheir fiduciary duty ... to say it's not just the planet at risk here. It's people's savings and pensions ... if we don't take action.”
Anne Simpson, CalPERS' senior portfolio manager and director of global governance, said at the teleconference that a group of 347 global asset owners and other institutional investors representing $24 trillion in assets — including CalPERS, CalSTRS, BT Pension Scheme, APG and BlackRock — is calling for governments worldwide to impose carbon pricing and other measures that would encourage more green investment.
“There is a market failure that needs to be addressed,” Ms. Simpson said. “Carbon is not priced and subsidies (to fossil-fuel companies) are distorting investment decisions.”