Shifts in global policy being discussed at the Paris Climate Conference have the potential to bring about a sea change in capital markets -- one that is likely to have a profound effect on cities and regions across America.
The goal of the 195 assembled world leaders is to build a climate alliance capable of keeping the average global temperature rise below 2 degrees Celsius compared to pre-industrial levels and to adapt cities to the disruptions that already are occurring due to climate change. Such collaborative policy among world leaders could accelerate the growth of an embryonic trend toward a global low-carbon economy.
Organizers of the first-ever Climate & Capital conference, held in Paris in conjunction with the Climate Conference, hope to buttress the efforts of national and local leaders to reduce carbon emissions by organizing capital investments to trigger a major shift in the markets. "Mobilizing financial resources is the critical piece in combating the warming of our planet," former vice president and Nobel laureate Al Gore told more than 150 blue-chip global investors. "We have the chance to be part of the greatest investment opportunity of our generation."
There is no debate over the fact that a strong wind is blowing institutional capital toward growth and acceleration of a new low-carbon economy. The successful organizing of investment capital on a global, national and regional scale will be a strong driving force propelling the transition of financial markets toward efficiency and clean energy. This movement is important to urban economic development planning and improving regional competitiveness outcomes.
More than $1 trillion in assets under investors' management was represented at the Climate & Capital conference, which was the brainchild of Next World Group founder Sebastien Lépinard. "The gathering of investment practitioners to discuss the tools and strategies around moving capital toward climate change in a fiduciary manner is a new thing," Lépinard said. "Investment managers need to integrate climate change into their fiduciary duties, given both the consequences and opportunities the low-carbon economy presents."
Climate policy and market changes of such magnitude will, of course, be initiated at the municipal level, as the mayors of more than 360 cities convened in Paris are well aware. They were led by former New York mayor Michael Bloomberg in pledging that the collective impact of their commitments will result in more than half of the world's carbon emission reductions by 2020.
Not that there isn't plenty of interest in the issue at the national level. Just a few days ago, Democratic presidential candidate Bernie Sanders rolled out his own plan to cut carbon emissions 80 percent by mid-century, which he said would result in a 40 percent decrease across the United States by 2030. But the inconvenient truth is that any successful effort will require a monumental movement of institutional investment capital toward green-market, low-carbon solutions. Sen. Sanders can't magically create his projected 10 million clean-energy jobs. But new market investments, innovative entrepreneurs and business leaders can.
That's why the Climate & Capital conference is such a significant event. Its organizers, who include California billionaire Tom Steyer, are passionate about the need to shift America's dirty economy toward clean energy and environmentally conscious economic growth.
For his part, Gore chose to participate to address prominent investors who can help overcome the inertia of market resistance to change. "It's clear that private capital has a significant role to play in creating a low-carbon economy," Amplifier Strategies CEO and founder Allison Duncan said. "Time is of the essence." Hopefully, America will move faster to invest in a brighter, cleaner and more energy-efficient future.