Turns out environmental activists aren’t the only people who want to eliminate the risk of catastrophic global warming.
A group of more than 120 CEOs and other institutional investors who manage more than $12 trillion in assets sent an open letter to seven of the world’s wealthiest countries on Tuesday, asking them to make bold commitments to reduce greenhouse gas emissions during the U.N. climate talks later this year. The reason, the letter said, was because of the uncertainty surrounding how bad climate change would be and how it would affect their businesses.
“As institutional investors responsible for managing the retirement savings and investments of millions of people or managing endowments, we believe climate change is one of the biggest systemic risks we face,” the letter read, urging the countries’ financial ministers to support a long-term global emissions reduction goal that limits warming to a 2° Celsius.
The letter was sent to the Group of Seven (G-7), which is made up of the finance ministers of the United States, the United Kingdom, Canada, France, Germany, Italy, and Japan. Among the letter’s signatories were managers of some of the world’s biggest investment and pension funds, including the California Public Employees’ Retirement System, the New York State Common Retirement Fund, and the AFL-CIO.
Aside from how climate change might impact business, the letter also stated that reducing carbon emissions would come with numerous financial incentives. Along with giving investors clarity about the future, the letter said a strong goal to reduce emissions would “serve to reduce policy risk, incentivize [research and development], facilitate the deployment of new technologies, and ultimately create new jobs.”
The letter also said that reducing carbon emissions to meet the 2°C target would be cheap, citing an International Energy Agency report that showed energy and transportation systems across the world could meet the goal with existing technology without harming economic growth. It noted that carbon emission reductions are already taking place in some sectors without harming the economy — indeed, last year energy-related carbon dioxide emissions flatlined globally while the world economy grew, something that had never before happened.
“The benefits of addressing climate change outweigh the costs,” the letter read.
The group of CEOs was organized by five responsible investment groups from around the world, but it is far from the first group representing monetary interests to come out and ask for action on climate change. Last month, a group of big insurance companies and consumer organizations asked the United States to strengthen its disaster policies in the face of increasingly extreme weather due to human-caused climate change. And last week, one of the world’s largest insurance companies pledged to drop its remaining investment in coal assets, saying climate change was already driving an increase in weather-related risks, which threaten business.
And, though they haven’t come out and called for climate action, big oil companies also seem to be worried about the risks climate change poses. At an annual meeting in April, BP shareholders agreed to a resolution stating the company should provide more information about its “preparation for the low carbon transition.” ExxonMobil has also admitted it faces risks from climate change, and has pledged to “ensure our facilities, operations and investments are managed with this risk in mind.”