Tackle climate or face financial crash, say world's biggest
investors
UN summit urged to end all coal burning and introduce
substantial taxes on emissions
Damian Carrington in Katowice
@dpcarrington
Mon 10 Dec 2018 00.01 GMT Last modified on Mon 10 Dec 2018
00.55 GMT
Global investors managing $32tn issued a stark warning to
governments at the UN climate summit on Monday, demanding urgent cuts in carbon
emissions and the phasing out of all coal burning. Without these, the world
faces a financial crash several times worse than the 2008 crisis, they said.
The investors include some of the world’s biggest pension
funds, insurers and asset managers and marks the largest such intervention to
date. They say fossil fuel subsidies must end and substantial taxes on carbon
be introduced.
Ministers arrive at the UN climate summit in Katowice,
Poland, on Monday for its crucial second week, when the negotiations on turning
the vision of the Paris agreement into reality reach a critical point, with
finance for fighting global warming a key area of dispute.
“The long-term nature of the challenge has, in our view, met
a zombie-like response by many,” said Chris Newton, of IFM Investors which
manages $80bn and is one of the 415 groups that has signed the Global Investor
Statement. “This is a recipe for disaster as the impacts of climate change can
be sudden, severe and catastrophic.”
Investment firm Schroders said there could be $23tn of
global economic losses a year in the long term without rapid action. This
permanent economic damage would be almost four times the scale of the impact of
the 2008 global financial crisis. Standard and Poor’s rating agency also warned
leaders: “Climate change has already started to alter the functioning of our
world.”
Thomas DiNapoli, of the $207bn New York State Common
Retirement Fund, another signatory, said taking action on global warming not
only avoided damage but could boost jobs and growth. “The low-carbon economy
presents numerous opportunities and investors who ignore the changing world do
so at their own peril.”
Lord Nicholas Stern, of the London School of Economics said:
“The low-carbon economy is the growth story of the 21st century and it is
inclusive growth. Without that story, we would not have got the 2015 Paris
agreement, but the story has grown stronger and stronger and is really
compelling now.”
The US Trump administration will hold its only event at the
UN summit on Monday and is expected to promote “clean coal”. But Stern said
Trump’s suggestion that action on climate change was a jobs killer was “dead
wrong”. Stern said: “You don’t create jobs for the 21st century by trying to
whistle up jobs from the 19th century.”
A key demand of the Global Investor Statement is to phase
out coal-fired power stations across the world. Peter Damgaard Jensen, the CEO
of Danish pension fund PKA, said: “Investors, including PKA, are moving out of
coal in their droves given its devastating effects on the climate and public
health, compounded by its poor financial performance.”
Dozens of nations will affirm their commitment to end their
coal burning on Thursday. However, the UN summit has seen US, Chinese and
Japanese financial institutions cited as leaders in providing nearly $500bn in
backing for new coal plants since the Paris agreement was signed.
Another investor demand on governments is to introduce
“economically meaningful” taxes on carbon. Most are below $10 per tonne, but
needed to rise to up to $100 in the next decade or two, the investors said. The
French president Emmanuel Macron’s botched attempt to increase fuel taxes and
the gilets jaunes protests that followed were a model of how not to do it, said
observers in Poland.
“It failed to take people along with them, accompanying the
policy with social measures to allow citizens to embrace the opportunities of
the transition and ride out the challenges,” said Camilla Born, of advisers
E3G. The host government of the climate summit, Poland, is heavily reliant on
coal and is stressing the need for a “just transition” for workers in the
fossil fuel industry.
The investors include some of the globe’s largest pension
funds, such as Calsters and ABP, and insurers, including Aviva, AXA and Zurich.
They also want an end to subsidies for coal, oil and gas, which the IMF rates
at $5tn a year and which the G20 has been promising to tackle for a decade.
This measure alone could cut global CO2 emissions by 10% by 2030, according a
UN report released in time for the Poland summit.
The investors said current national pledges to cut carbon
would lead to a catastrophic 3C of global warming and that plans must be
dramatically increased by 2020. For developing countries, ”finance is the
critical enabler of increasing ambition,” said Niranjali Amerasinghe, of the
World Resources Institute.
UN climate summits are frequently dogged by disputes over
the $100bn a year that rich nations have promised to poorer ones by 2020 to
tackle climate change. Direct government funding and private company finance
were needed, Amerasinghe said: “It is really great when private sector is out
there saying we are going to invest in climate-friendly activities.”
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