As the G8 Summit opens in Germany today, the heads of 23 financial service companies urged the world's eight most industrialized countries to agree on deep cuts in the emissions of greenhouse gases responsible for the planet's rising temperature.
They fear that unchecked climate change is likely to lead to an increase in climate-related disasters, with "grave social and environmental harm," including annual economic losses that could rise as high as US$1 trillion by 2040.
The coal-burning Bruce Mansfield power plant in Pennsylvania (Photo courtesy Kiyo Komoda)The companies, members of the UN Environment Programme's Finance Initiative, said today in a statement to the G8 Summit in Heiligendamm, "There has been a seismic shift in how climate change is perceived and it is widely considered to be the greatest market failure ever."
"Many of the effects of climate change are beginning to be manifested and the threats posed by continued warming will affect - and even possibly disrupt - the operation of markets, societies, ecosystems and cultures," the financial executives say in the first global statement on climate change by the finance sector.
The "Declaration on Climate Change by the Financial Services Sector," is signed by 23 CEOs, presidents, chairmen and managing directors of banks, insurance and re-insurance companies. It calls on the G8 heads of state to formally adopt emission reduction targets no later than 2009.
The statement was developed by the UNEP Finance Initiative's Climate Change Working Group.
In it the financial executives acknowledge:
- Unequivocally, human activity is a fundamental driver of climate change, as confirmed in the IPCC [Intergovernmental Panel on Climate Change] Fourth Assessment Report.
- Unless action is taken now to set in motion a worldwide transition to a low carbon economy, some scenarios suggest that by 2040, the world could experience annual economic losses as high as US$1 trillion; and grave social and environmental harm from climate-related disasters.
- Climate change could result in a reduction in global GDP equivalent to the economic impacts of the 20th century's major conflicts, as predicted by the Stern Review to the UK Prime Minister.
- The most severe impacts of climate change, including extreme weather events, drought, crop failure and disease will fall most harshly on those regions and people least able adapt to the impacts of climate change ? the world's poor.
The financial executives suggest that proposals by the UK and the European Union, setting out mandatory emission reductions of between 20 percent and 30 percent by 2020 and 60 percent to 80 percent by 2050, should be central to all industrialized country goals.
Dr. Joachim Faber, a member of the Executive Board of Allianz SE, said, "Setting clear and mandatory, medium and long-term emission reduction targets and implementing appropriate incentive schemes should be part of a new climate change regime. Politics should not disappoint the trust of the market. What the economy needs is planning reliability for future investment decisions."
Dr. Torsten Jeworrek, a member of the Board of Management of Munich Re, said, "Munich Reinsurance Company has signed the declaration on climate change by the financial services sector because climate change is one of the greatest challenges of our time."
Dr. Torsten Jeworrek is a member of the Board of Management of the Munich Reinsurance Company. (Photo courtesy Munich Re)
"The latest studies show that it is cheaper to invest in climate protection than to pay for the losses that result from inactivity. It is thus prudent to act now from an economic perspective as well," Jeworrek said.
"We at Munich Re are preparing corresponding risk-protection products," Jeworrek
Peter Sands, Group CEO of Standard Chartered, said, "At Standard Chartered, we take a long term view of the consequences of our actions and we are committed to building a sustainable business. We recognize our capacity for social and economic contribution, the need to protect the environment and for good governance in all the markets that we operate in. We are proud to be a signatory to the UNEP FI Declaration on Climate Change."
Said Barbara Krumsiek, president and CEO of Calvert Group Ltd., which offers socially responsible mutual funds, "As investors, we have a history of integrating climate change solutions into our investment philosophy and proxy voting. Now that the issue has reached the global crisis proportions, we need to help expand that focus by emphasizing the essential role public policy has to play."
Barbara Krumsiek is president and CEO of Calvert Group Ltd. (Photo courtesy Simmons)"This statement appropriately calls on governments to take strong action to curb greenhouse gas emissions not only to address this crisis but to also help protect the long-term investment horizon by spurring companies to set and meet hard targets to reduce greenhouse gas emissions," Krumsiek said.
The signatories of the UNEP FI declaration affirm their own commitment to sustainable management and limitation of their own greenhouse gas emissions.
The move reflects growing global interest from business and industry for action on climate change. Today's statement comes some six months after large corporations in America, including Duke Power, Alcoa and General Electric joined forces with NGOs to establish the United States Climate Action Partnership along with calls for emissions controls.
Russia's giant Surgut power plant burns natural gas while providing electric power to most of the oil and gas industries in western Siberia. (Photo courtesy RAO UESR)In addition, the European Business Council for Sustainable Energy has sent a letter to German Chancellor Angela Merkel, host of the G8 Summit, asking for "legally binding frameworks underpinning the carbon market." These frameworks would extend the European Union's carbon dioxide emissions trading system to a wider group of countries.
Based in Germany, the Business Council represents sustainable business groups and major companies across Europe, the United States and Australia.
In its letter to Merkel, the Business Council asked for an agreement in December 2007 at the United Nations climate negotiations in Indonesia to finalize a global pact by 2009 that would set binding emissions reductions targets covering the period after the Kyoto Protocol expires in 2012.
And this year, the Business Council said, should bring an agreement on "elements of a stable long term market framework for low carbon technology development and deployment."
Speaking on behalf of the business group, Sebastian Gallehr of the European Business Council for Sustainable Energy, said, "The business community has recognized the seriousness of climate change and is ready to act. We urge the leaders of the G8 to create the political momentum needed to deliver the long-term, international policy framework that will enable business to plan, invest, develop and deploy low carbon technologies and products."
"A sense of urgency is vital," he said, "because any delay in reaching an agreement will exacerbate the security threat posed to the world's economies by climate change."