U.S. Companies and Financial Institutions are Alert to Climate Change

October 4, 2006

Climate change has become a major concern among leading U.S. financial institutions and companies, according to a report issued in September by the Carbon Disclosure Project (CDP), a coalition of global investors with more than $31.5 trillion in assets. On February 1st, CDP requested information on corporate risks and opportunities associated with climate change from more than 2,000 companies globally, including the world's 500 largest publicly owned companies. Of the responding companies, 87 percent indicated that climate change represented "commercial risks and/or opportunities," although only 48 percent of those had implemented a greenhouse gas reduction program.

The report also notes that "clean tech"—a category that includes clean energy along with water resource and environmental remediation technologies—has become the fifth largest venture capital investment category in North America, trailing only biotechnology, software, medical technology, and telecommunications. The report estimates that the clean energy market will grow from $39.9 billion currently to $167.2 billion by 2015. The trend has caught the attention of numerous financial institutions: According to the report, AIG, Allianz and Goldman Sachs have released dedicated climate change policies in the past 12 months. See the CDP press release, which includes links to the full report.

The clean energy investment trend was driven home by the recent announcement that an investment group had sunk more than $1 billion into clean technology ventures over the previous 18 months. The members of the Investor Network on Climate Risk invested in such technologies as hydrogen fuel cells, renewable energy, water technologies, and advanced materials. For example, the nation's two largest public pension funds—the California Public Employees' Retirement System and the California State Teachers' Retirement System—have invested a total of $350 million in energy efficiency and renewable energy technologies. In addition, the New York Retirement Fund has committed $30 million to the Carlyle/Riverstone Renewable Energy Infrastructure Fund I, which has raised a total of $600 million to invest in renewable energy projects. See the press release from the Investor Network on Climate Risk.