Wednesday, January 18, 2012


date: Mon, 12 Jan 2004 12:20:38 -0000
from: "Elaine Jones" <>
subject: of interest
to: "andrew dlugolecki" <>, "Mike Hulme" <>

----- Original Message -----
From: [1]Phil Doran
To: [2]H2NET-LatXYZxyzrclsv.RL.AC.UK
Sent: Friday, January 09, 2004 8:24 AM

You might find this article on growing investor concerns regarding the unknown risks -
owing to lack of company disclosure - they face regarding climate change. This is an area
receiving ever more attention. Clearly, as the price of Carbon Emissions is internalised
through such systems as the European emissions system due to be introduced in 2005 the
price structure moves in favour of cleaner energy conversion technologies. This effect can
only be reinforced as investors begin to consider the (thus far unknown) `environmental'
risks they may face, ultimately raising the cost of capital for `offending' companies.

This article came out at the end of last year and carries some interesting messages.

UNITED NATIONS - State treasurers and pensions funds that help oversee $1 trillion in
assets last week urged U.S. regulators and business leaders to force corporations to give
investors more information on the financial risks from global climate change.

Eight U.S. state and city treasurers and comptrollers and the leaders of two large labor
pension funds issued a "call for action" at a day-long Institutional Investor Summit on
Climate Risk held at U.N. headquarters. Executives from top Wall Street banks and fund
management firms also attended the meeting. The plan basically asks the U.S. Securities and
Exchange Commission to impose tighter disclosure, reporting and risk assessment
requirements on corporations so that public pension funds can assess more accurately the
potential financial risk to their shareholdings from climate change.

The pension funds said a broad swath of industries could be vulnerable to new global
warming regulations or possible future legal action. As an example, fund officials said any
new regulation capping emissions of carbon dioxide by industrial firms could increase their
costs substantially as they would have to use cleaner and more expensive fuels.

In light of financial scandals at firms like Enron Corp. and WorldCom Inc., which have
blindsided investors, "what we want is no surprises," said Nappier, who as the Connecticut
treasurer helps oversee $19 billion. "We have certainly had enough of the unexpected, and
this time we want to know up front and early on, we want to know what exposure is down the
road and what damage is being done to our investments and to our economy," she said.


"Most of Wall Street today seems to ignore climate risk and feels more comfortable
pretending that global warming will not affect their portfolios," said Leon Panetta, former
director of the U.S. Office of Management and Budget. "The data is piling up and the trends
are clear. In 2003, it is irresponsible for any major investor or fiduciary to ignore the
risks of global warming," Panetta said, suggesting the lawyers who filed the first lawsuits
against tobacco and asbestos firms were now looking at global warming. "How long will it
take before someone takes a swing at an oil company or a power company?" he asked.

Former U.S. Vice President Al Gore, now vice chairman of Metropolitan West Financial,
attended the summit. He noted a recent report that China was drafting ambitious fuel
economy standards for cars and trucks, to cut down on fuel use. We could be in a situation
where they are providing cars to markets through the years that greatly exceed the
environment standards that we (in the United States) are used to building toward," Gore
said. "We will be behind the curve in every way."

Pressed on whether the public pension funds would divest companies that did not comply with
their demands, New York State Comptroller Alan Hevesi said: "Divesting is the last thing
you want to do .... Once you divest you no longer have an influence over the company."
However, he added: "You might have to divest at the end of a process and say 'this company
is beyond the pale'."

Phil Doran

Core Technology Ventures LLP
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