In December, world leaders will meet in Paris to negotiate a global agreement on climate change. For investors like us and for our clients, climate change is a key area of focus. Because of our long term investment horizon, we need to consider and prepare for scenarios that potentially have material impact on our investment portfolios in the long run. Climate change is an important factor in those scenarios. Therefore, we support a strong result at the climate summit in Paris.
We are convinced that reducing the negative effects of climate change requires more sustainable growth initiated by the private and public sector, i.e. economic growth based on more renewable energy and efficient use of raw materials. Sustainable growth offers opportunities. We are currently investing considerably in renewable energy, such as wind energy at sea and on land, and in clean technologies that contribute to efficiency. Encouraged by the investment policy of our largest client PFZW, we want to quadruple these investments by 2020. In addition, next year we will take considerable first steps towards halving the carbon footprint of the investments in 2020, also encouraged by the investment policy of PFZW.
Strong agreement is necessary to take next steps
A strong agreement in Paris, including a long-term international emission reduction goal and strong national plans, with the aim to limit average global temperature rise to 2°C is essential. Such agreement will set a clear pathway in favor of a low carbon economy. This will reduce policy risk, incentivize R&D, facilitate the deployment of new technologies, create new jobs and will contribute to clarity and certainty that is necessary for long term investment decision making.
Together with PKA, we published a joint paper
that describes our ambitions and needs. In order to meet our climate investment ambitions and those of our clients, we need policies that are reliable and predictable. Also, undesirable effects of regulation that impede investment in sustainable growth should be critically assessed. We have suggested a number of ways investors and policy makers could respond to climate change:
- Innovative de-risking models based on blending public and private finance could help overcome the constraints that climate related investments in developing countries face: high political and financial risks.
- We support mechanisms that put a price on carbon, as they are best at shifting capital and knowledge towards the most efficient solutions.
- Policymakers should increasingly support and explore the opportunities within energy efficiency in order to drive innovation, unlock private capital and mitigate risk of energy price volatility.
- Closer cooperation between public and private parties aiming at creating a stable investment environment is necessary to boost impact investing.
We believe that together we can limit climate change, which is now more urgent than ever. That is why we intend to actively communicate our position in Paris.
Read the position paper Private capital as a force to limit climate change