Investors Accelerate Climate Action In Post-Paris Agreement World
By Christopher N. Fox
When 175 leaders signed the historic Paris Agreement on climate change in April, they sent a clear signal to the markets: the global shift from fossil fuels to clean energy is inevitable and already underway.
The Paris Agreement’s goals include holding the increase in the global average temperature to well below two-degrees Celsius, and achieving net zero greenhouse gas emissions in the second half of this century.
Many leading investors are now accelerating their efforts to prepare for success in the post-Paris Agreement world. As CalPERS CEO and Ceres board chair Anne Stausboll put it in her remarks, the agreement is “a powerful global green light” for clean energy investment. Stausboll leads the largest public pension fund in the U.S. with approximately $300 billion in assets. She joins Ceres and a chorus of investors calling on world leaders to invest an additional $1 trillion dollars a year in clean energy to achieve the goals of the agreement.
The signing of the Paris Agreement has provided a fresh boost of momentum to the Ceres Clean Trillion campaign. Investors are now positioning themselves to capture the opportunities of the low-carbon, clean energy future, and manage the risks of continued reliance on high-carbon energy resources such as coal, oil and gas.
Investors worldwide continue to join forces through the Carbon Asset Risk initiative to press for improved corporate governance and disclosure on climate risk at carbon-intensive companies. Most recently, investors with more than $10 trillion in assets declared their support for climate resolutions calling on ExxonMobil and Chevron to stress test their business strategies against a scenario in which global warming is limited to below two-degrees Celsius. Investors garnered unprecedented voting support for these resolutions, with 38 percent voting in favor of the resolution at ExxonMobil and 41 percent at Chevron.
The results were the highest votes ever for climate resolutions in the history of both oil companies and a clear sign of the mounting investor concerns over the business impacts of climate change. As former Vice President and Generation Investment Management Chairman Al Gore explained at a Ceres event in May in San Francisco, “carbon assets are vulnerable to being stranded.” The market capitalization for the global coal industry has plummeted in the last five years, Gore pointed out, and “ExxonMobil lost its triple-A bond rating last month for the first time since 1949.”
In May, Ceres also released a groundbreaking new report on the U.S. insurance industry’s exposure to increasingly risky fossil fuel investments. The report makes recommendations to fossil fuel companies and their investors on how to better manage climate risks.
The markets are now waking up to the Paris Agreement’s clear signal: the future is in clean energy, not fossil fuels. The world leaders, and the investors and companies that move quickly to prepare for the clean energy future will be the best able to capture the opportunities that lie ahead.
My Ceres colleagues and I welcome your thoughts and questions on Ceres’ Clean Trillion campaign. Please feel free to connect with me at email@example.com or on twitter @ChristopherNFox and follow Clean Trillion on twitter @CleanTrillion.