CFO Sink Joins U.S. and European Investors Confronting Climate Change Risks and Opportunities
CONTACT: Tara Klimek or Kevin Cate
Investors Make Bold Commitments to Energy Efficiency and Other Clean Technologies Require Closer Scrutiny of Carbon-Intensive Investments
NEW YORK, NY— Florida Chief Financial Officer Alex Sink today joined nearly 50 leading U.S. and European institutional investors managing over $1.75 trillion in assets in releasing a climate change action plan at the United Nations that will boost investments in energy efficiency and clean energy technologies and require tougher scrutiny of carbon-intensive investments that may pose long-term financial risks.
The action plan was announced at the Investor Summit on Climate Risk, hosted by Ceres and the United Nations Foundation and attended by more than 450 investor, financial and corporate leaders from around the world. Signatories to the action plan include state treasurers, controllers, pension fund leaders, asset managers and foundations from London, California, Florida, New York, Connecticut, North Carolina, Pennsylvania and a dozen other states.
"With today’s action plan, investors are advancing the need for closer scrutiny of investments to include the financial risks of climate change, while also harnessing emerging opportunities," said Florida Chief Financial Officer Alex Sink. "Florida is on board as the first State Treasury in the nation to require fund managers to disclose how they incorporate climate risk into prudent investment management."
Noting that climate change presents both material risks and significant opportunities, the investors pledged to collectively invest $10 billion in clean technology opportunities over the next two years and to incorporate green building standards —such as LEED (Leadership in Energy Efficiency and Design) and Energy Star — into their investment decisions. Calling energy efficiency "one of the fastest, easiest and cheapest ways to significantly reduce emissions and improve the bottom line," the investor group pledged to reduce energy use in core real estate holdings by 20 percent over the next three years.
A new McKinsey Global Institute (MGI) report, also announced at the investor summit, concludes that major investments over the next decade in energy productivity — the level of output achieved from the energy consumed — could earn double-digit rates of return for investors. Such investments would cut global energy demand growth by at least half and achieve up to half of the reductions of greenhouse gas emissions that experts say is required to prevent the world's mean temperature from increasing by more than 2 degrees centigrade.
The action plan calls for a series of specific steps by investors to address the growing risks and opportunities from climate change. The nine goals include policy actions aimed at the Securities and Exchange Commission (SEC) and Congress, engagement with companies to improve their disclosure and responses to climate change, minimizing climate investment risks and maximizing climate-related investment opportunities. Among the investor commitments:
• Support clean technology, with a goal of deploying $10 billion collectively over the next two years.
• Aim for a 20 percent reduction in energy used in core real estate investment holdings over a three-year period, and consider green building standards in making investment decisions.
• Require and validate that investment managers, investment consultants and advisors report on how they are assessing climate risks in their portfolios, whether from new carbon-reducing regulations, physical impacts or competitive risks.
• Encourage Wall Street analysts, rating agencies and investment banks to analyze and report on the potential impacts of foreseeable long-term carbon costs, in the range of $20 to $40 per metric ton of CO2, particularly on carbon-intensive investments such as new coal-fired power plants, oil shale, tar sands and coal-to-liquid projects.
• Push the SEC to issue guidance leading to full corporate disclosure of climate risks and opportunities.
• Push Congress for a mandatory national policy to reduce national greenhouse gas emissions in accordance with the 60-90 percent reductions below 1990 levels by 2050 that scientists suggest is urgently needed to avoid the worst and most costly impacts from climate change.
"This action plan reflects the many investment opportunities that exist today to put a dent in global warming pollution, build profits and benefit the global economy," said Mindy S. Lubber, president of the Ceres investor coalition and director of the Investor Network on Climate Risk. "Leveraging the vast energy efficiency opportunities at home and abroad holds especially great promise for investors."
The summit comes as worldwide investor attention on climate change dramatically increases. In the last two years, investor and asset manager participation in the Investor Network on Climate Risk has more than doubled, to more than 60 institutional investors and with collective assets totaling $4.5 trillion. At today's summit, Deutsche Asset Management, which manages over $800 billion in assets, announced it was joining INCR, increasing INCR's total member assets to over $5 trillion.
Today's climate risk meeting was hosted and organized by the United Nations Foundation, the United Nations Fund for International Partnerships and Ceres, which directs the Investor Network on Climate Risk. Ceres is a U.S. coalition of investor and environmental leaders that has spearheaded national and international investor activity on climate risk issues. A webcast of the summit and press conference can be found at www.un.org/webcast
As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Alex Sink oversees the Department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. CFO Sink also serves as the State Fire Marshal.