Events

Bridging the public-private divide on climate change

UNEP FI at the UNFCC 17th Conference of Parties (COP 17)
28 November – 9 December 2011 | Durban, South Africa

IV. Advancing the integration of corporate carbon performance into financial decision-making on the capital markets

The low-carbon transition will require a fundamental shift in the behavior of the private sector, toward much higher levels of energy and carbon efficiency across the global economy. To achieve this, millions of disperse business decisions will need to systematically integrate greenhouse gas (GHG) emissions and energy consumption as critical variables.

However, at present the behavior of companies and investors is often driven by maximization of shareholder value in the short term, which is often not compatible with long-term interests in creating a stable, sustainable global economy. As a result, current decarbonisation efforts in the private sector lack the scale and pace required to avoid dangerous climate change by keeping GHG concentrations in the atmosphere below 450 ppm.

In order to overcome this misalignment, appropriate policies will be needed to shift the ‘rules of the game’ in a way that can align large-scale improvements in energy and carbon efficiency with the creation of shareholder value.

Through their unique constituencies, the member companies and institutions within the UN Global Compact and UNEP’s Caring for Climate initiative, UNEP FI, and the Principles for Responsible Investment are already promoting the development of innovative climate technologies and solutions, supporting investors and financial institutions to move from carbon risk awareness to carbon reduction action, and encouraging investors to engage with portfolio companies on climate change.

A series of significant trends over the last decade have also put greenhouse gas emissions at the center of the debate:

• Greenhouse gas emissions are increasingly a material source of risk for some investee companies as well as investors, due to the potential reputational, regulatory, and physical and financial liabilities.
• In some cases, reducing emissions has become a source of revenue and financial return.
• In an increasing number of markets greenhouse gas emissions have become a cost, through regulation that puts a price on carbon, through emissions trading schemes or the introduction of carbon taxes.
• Wide-spread corporate carbon disclosure has become a reality even if large gaps, difficulties and challenges persist, through investor initiatives such as the Carbon Disclosure Project (CDP) and commercial data providers.
• Greenhouse gas emissions are easily quantifiable which allows for the easy integration of “carbon risk” into business and investment decision making.

Despite these promising trends, greenhouse gas emissions continue largely at business as usual levels, and too often do not find their way into financial decision-making.

UNEP FI / UN Global Compact / PRI event; a plenary session at the World Climate Summit (WCS), on

Low-carbon capital for a low-carbon economy

This World Climate Summit plenary session brought together global leaders from investee companies in the real economy, institutional investors and global financial conglomerates, to discuss which drivers need to emerge or be intensified so that the striving for shareholder value becomes the global engine for GHG reductions. The key question asked was: what needs to happen for markets to become low-carbon as the key prerequisite of a global low-carbon economy?

Venue: Southern Sun Elangeni Hotel Durban, South Africa

Date & Time: 3 December, time to be announced

Speakers

• Murilo Ferreira, CEO, Vale
• Wolfgang Engshuber, Chief Administrative Officer, Munich Reinsurance America - Chair of PRI
• Senior representative of an international asset management firm
• Elias Masilela, Head of Policy Analysis, Sanlam and Member of the National Planning Commission of South Africa
• Lord Nicholas Stern, Professor of Economics, London School of Economics – Author of The Stern Review on the Economics of Climate Change (former World Bank Chief Economist)

Moderator:

• José Maria Figueres Olsen, CEO, CONCORDIA 21 (former President of Costa Rica)

Relevant UNEP FI reports and background information:

Contact

Kira Gaza
climate@unepfi.org