The U.N. climate change summit this week provides the perfect opportunity to press for action on the issue. The aforementioned groups are proposing that leaders make it more expensive for businesses and ordinary people to pollute.
The corporate world has now sided with the policymakers, economists and environmentalists, who have long maintained that humankind cannot hope to slow down climate change until money, raised from charges on the everyday activities that contribute to global warming, is used to counteract it.
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Of course, business leaders concerns are not entirely altruistic. They worry that the long-term value of their investments is threatened. The group represents trillions of dollars in revenue and retirement savings, and they want leaders to provide an incentive to cut pollution.
Can an agreement be reached?
At the U.N. summit on Tuesday, 120 world leaders will attempt to drum up the political will required for the successful drawing up of a new climate treaty in Paris next year. U.N. Secretary General Ban Ki-moon called the summit in an effort to nudge leaders into preventing the Earth’s temperature from rising more than 2 degrees Fahrenheit (1.1 degrees celsius), an aim that was set in 2009.
“There’s a market failure that needs to be fixed,” said Anne Simpson, senior portfolio manager and director of global governance at the $300 billion California Public Employees’ Retirement System, the largest public pension fund in the U.S. Despite her, and other business leaders, enthusiasm for new measures, it has so far been impossible to put a price on pollution.
Climate change: Potential measures
One idea that has been discussed at length is a tax on carbon emissions, or a carbon cap.
CalPERS, Allianz SE (ETR:ALV) (OTCMKTS:AZSEY), BlackRock, Inc. (NYSE:BLK) and the AXA Group last week called for a “meaningful” price for carbon emissions. According to a World Bank statement on Monday, 73 countries and over 1,000 companies would like to see a price put on carbon emissions.
It is thought that polluters could be nudged into changing their ways if a financial incentive to do so was provided, namely charging for carbon emissions. Another positive effect would be the diminishing returns on investments in fossil fuels, and the greater attractiveness of clean energy stocks.