Climate Change for Investors
New investment is in danger of heading overseas if business continues to look for an escape from the harsh realities of climate change and does not begin a reallocation process of capital towards sustainable investments, says a visiting expert on climate change investment.
James Cameron, co-founder of British-based investment banking group Climate Change Capital, said Australia could "miss the boat" on millions of dollars of investment if the Government accepted Professor Ross Garnaut's recommendation of a 10% cut in emissions levels by 2020.
Mr Cameron, who will speak at the Australian Super Investment Conference today, told BusinessDay that fund managers, institutional investors and business might look towards Europe if a $20 a tonne carbon price was adopted in Australia.
"If there is a higher carbon price in Europe then investment will go there and thrive there," he said. "A 10% reduction is still meaningful but it doesn't compare to the level of commitment that is being put in on other levels at least at the policy level."
Mr Cameron said complaints from business were shortsighted. He called for Prime Minister Kevin Rudd to show the leadership he displayed when he ratified the Kyoto Protocol.
"What you look for in political leadership is a certain amount of courage to respond rationally to the climate science, which means dismissing arguments made by business to make life too soft. I am disappointed at some of the business leadership in Australia that is still looking for some kind of escape to the physical realities of the climate change issue."
Mr Cameron said investment on climate change was not merely about "doing the right thing" but also about new opportunities to make money.
"There needs to be a rational response to climate change in the investment community and that requires proper analysis of the risk and whatever asset class you decide to focus on — listed equities, private equity, real estate and property, agricultural land — there is a climate change dimension that needs considering," he said. "The message I will be giving is don't be timid or afraid of investing in large amounts in climate change mitigation."
Mr Cameron said: "Institutional investors in Australia have a huge commitment to the big producers and users of carbon in the way the money has flowed to the natural resource companies in Australia."
"But those companies have strong balance sheets. They can afford to make changes and find good alternatives to fossil fuels and other companies are going to grow up around the value of reducing emissions."
Source: climatechangecapital.com & theage.com.au