LONDON (Reuters) - The private sector needs to make a “quantum leap” by joining forces in lobbying efforts, radically changing business models and increasing investment in order to combat climate change, the U.N.’s climate chief said on Wednesday.
Leaders of 193 countries are set to meet for the next annual U.N. climate summit in November in South Africa, where governments will discuss ways to encourage investments to reach at least $100 billion a year by 2020 toward tackling climate change.
Companies that advocate climate change need to have a stronger, unified voice to counteract others that might oppose stronger action, said Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change, in a webcast of a meeting of chief executives in London.
“A serious group of companies has a voice much louder and operates in more unison but is still stuck in the technologies and fuels of yesterday,” she told the meeting.
“If you don’t have a voice equally as orchestrated, governments are going to take timid decisions.”
Even though the threat of another global economic slowdown has tightened purse-strings of both governments and companies, the U.N. still wants to spur private sector investment.
“The quantum leap has to be based on vision, capital availability, executive capability, and policy support,” Figueres said.
A report by the Carbon Disclosure Project showed on Wednesday those companies that implemented climate change strategies delivered double the average investment returns of those that did not between January 2005 and May 2011.
Current global GDP of around $60 trillion is forecast to rise to $120-$200 trillion by 2030, Figueres said.
At the same time, carbon dioxide emissions need to be cut to 20 billion tonnes by 2030, from the current 30 billion.
More firms need to radically change their business models to factor in sustainability and climate issues, said Ian Cheshire, chief executive of retailer the Kingfisher Group.
“Many companies are not taking enough risks because they do not have enough confidence that climate investment can provide adequate returns,” he said.
“We need a quantum leap difference which goes against the grain of many businesses and that may be the problem,” he said.
Although interest in climate investments is on the up, there are not enough large investors on board, said FTSE Group chief executive Mark Makepeace.
Pension funds have often been touted as huge sources of potential capital, but Alan Brown, chief investment officer of Schroders Plc, which has $326 billion of assets under management, said spurring enough private sector investment could be a “Herculean task” because investors need better incentives.
“We need to look to the asset management industry’s owners and make it clear to fiduciaries to bear in mind a broad range of stakeholder views and not just the risk of return,” he said.
Reporting by Nina Chestney and Susana Twidale, editing by Jane Baird