Institutional investors managing £15tn of assets have called for an ambitious global climate deal to give them certainty to invest in clean technology.
More than 340 institutions including BlackRock, the world’s largest asset manager, AXA Group and Legal & General Investment Management, have called for strong policies to drive action on climate change.
The organisations want governments to put a “stable, reliable and economically meaningful” price that polluters have to pay for their carbon emissions, which will help scale up investment towards clean power and energy efficiency.
Ahead of a UN climate summit in New York next week, the investors are also calling on governments to phase out subsidies for fossil fuels, an estimated £370bn worldwide a year, five times the £60bn paid in renewables subsidies.
The institutions warned that experts say an extra $1tn (£600bn) a year on average up to 2050 is needed to limit temperature rises to 2C and avoid the worst affects of climate change.
Global investment in clean energy in 2013 was just $254bn (£160bn).
In a statement, the investors, who also include the BBC Pension Trust, BT Pension Scheme, Aviva Investors, Standard Life Investments and Church Commissioners for England, set out action they will take to tackle climate change.
But they warned: “Gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions. Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments.”
A number of investors are already taking action, a report launched alongside the statement shows, such as the UK’s Environment Agency Pension Fund which is on track to have 25% invested in companies and assets contributing to low carbon and climate resilient activities by 2015.
Zurich Insurance Group is investing up to £1.2bn in AAA-rated green bonds, and global banking firm ING Group is increasing its renewable energy project loans to almost £1bn and has reduced exposure to coal power in its project loan portfolio from 63% in 2006 to 13% in 2013.
Stephanie Pfeifer, chief executive of the European Institutional Investors Group on Climate Change (IIGCC), one of four investors groups co-ordinating the statement, said: “The international investor community has today made it clear that the status quo on climate policy is not acceptable. Investors are taking action on climate change, from direct investment in renewables to company engagement and reducing exposure to carbon risk.
“But to invest in low carbon energy at the scale we need requires stronger policies. At the UN climate summit next week, policymakers can ensure pockets of climate leadership turn into mainstream actions.”
The UN summit in New York, organised by secretary general Ban Ki-moon, aims to drive action to tackle emissions in the run-up to talks in Paris at the end of next year, when it is hoped a new global treaty on climate change will be agreed.