Investors responsible for the management of US$15 trillion funds have issued a statement calling for policies to unlock the vast potential of low-carbon markets and avoid economic devastation caused by climate change.

The call comes from the world's largest global investors in the context of the latest round of climate negotiatons in Cancun, Mexico which start today. The statement was signed by more than 259 investors from Asia, Africa, Australia, Europe, Latin America and North America, with collective assets under management totaling over US$15 trillion-more than one-quarter of global market capitalisation. As well as global giants Allianz and HSBC, signatories also include investment organizations from many developing countries and emerging economies, including South Africa, Nigeria and Brazil. It is the largest-ever group of investors to call for government action on climate change.

The investors want Governments to take action now in the fight against global warming or risk economic disruptions far more severe than the recent financial crisis-  they cite potential climate-related GDP losses of up to 20 percent by 2050.

"We cannot drag our feet on the issue of global climate change," said Barbara Krumsiek, Chair of the UN Environment Programme Finance Initiative and CEO of US-based investment firm Calvert Investments. "Calvert is deeply concerned about the devastating impacts climate change - if left unaddressed - will have on the global economy. Based on the Stern Report, we know these impacts could reach global GDP cuts of an unimaginable 20% per year. Why should we take that risk? The solutions are quickly emerging and we must deploy these solutions to help secure the innovation and sustainable growth our economies need."

 While low-carbon global investment is increasing, especially in Asia, investors say substantially more private capital would be available for renewable energy, energy efficiency and other low-carbon technologies, if stronger policies were in place. Global clean energy investment is expected to eclipse $200 billion in 2010, up slightly from 2009 but substantially less than the roughly $500 billion that Bloomberg New Energy Finance and the World Economic Forum says is needed per year by 2020 to restrict warming to below 2 degrees. 

"This statement shows investors are serious about the risks posed by climate change and the importance our community places on action by government to reach a global agreement. Investors need greater policy certainty from governments," said Donald MacDonald, trustee, BT Pension Scheme, and chair, Principles for Responsible Investment. "Deferring climate change agreement adds to investor concerns that climate change risks and costs are not taken seriously. The Cancun talks provide an opportunity for all concerned governments to take leadership on this important issue and start framing an agreement needed to create a sustainable investment environment."

Corporate disclosure of climate-related risk needed

The statement calls for the following domestic policies in both developed and developing countries:

• Short-, mid- and long-term greenhouse gas reduction targets
• Energy and transportation policies to accelerate deployment of energy efficiency, renewable energy, green buildings, clean vehicles and clean fuels;
• Strong and sustained price signals on carbon emissions and well-designed carbon markets;
• Phase out fossil-fuel subsidies, as agreed to by G-20 leaders in 2009;
• Adaptation measures to reduce unavoidable climate change impacts, and;
• Corporate disclosure of material climate-related risks.

Other areas where investors hope to see agreements or progress in Cancun include a rapid timeframe for implementation of efforts to reduce emissions from deforestation and forest degradation (REDD) and REDD-plus), expansion and deepening  of the international carbon market - including greater clarity on the future interplay of the Carbon Development Mechanism (CDM) and a clear mandate to adopt a legally binding agreement next year at COP 17 in South Africa.