A group of 285 investors around the world, representing assets of more than $20 trillion, have released a statement saying that they believe climate change presents major long-term risks to the global economy and to the assets in which they invest. But they also say that long-term climate change and clean energy policies present significant opportunities for investors, creating new jobs and businesses, technological innovation, and a foundation for economic recovery and growth.
The statement points out that massive investment in low-carbon energy will be required. But there will only be sufficient private investment if there is a clear, credible and long-term policy framework that incentivises investment in low-carbon technologies.
To attract private sector investment, governments need to:
Ensure that effective policies exist. These should include(among other things) clear GHG emissions reductions targets, comprehensive energy and climate change policies, support for renewable energy generation and adaptation measures to reduce unavoidable climate impacts.
Ensure that the policies are well designed. So, for example, there should be appropriate incentives to invest and recognition that scale is essential in enabling low-carbon investment to be more cost-effective. Policies should also be transparent and long-term – large-scale investors need policy certainty.
Ensure relevant regulatory bodies are in place with sufficient resources and the authority to ensure that climate change and related energy policies are effectively implemented.
The statement goes on to say that an international climate change regime is critically important. It would signal serious international resolve to tackle climate change, promote confidence that government commitments will be delivered and provide a forum for governments to encourage more ambitious national actions.
It’s curious that governments often back away from climate change legislation on the grounds that it would impact their industry competitiveness. By comparison, companies and investors see the potential negative impact of climate change on their businesses and the opportunities of a future green economy and look to governments to put the appropriate policies in place. A lot of that future relies on the enabling capabilities of green ICT.