The world cannot rely enough on voluntary efforts to curb greenhouse gas emissions in order to curtail climate change, said the director of corporate engagement at Calvert Research and Management, an investment management firm that specializes in responsible investing, in a speech to members of Congress Thursday.
There is “a clear consensus among both investment professionals and corporate executives that voluntary efforts will not be enough, since business incentives are misaligned,” said Calvert’s John Wilson to a Senate subcommittee. “Those responsible for the emission of greenhouse gases do not bear the costs of climate-related harms such as extreme weather events, drought and sea level rise—instead, these costs are borne by us all.”
The testimony came as the Subcommittee on Clean Air and Nuclear Safety (part of the Senate Committee on Environment and Public Works) considered the topic in a session called "Reducing Emissions While Driving Economic Growth: Industry-led Initiatives."
Wilson pointed out the importance of mitigating the potential effects of climate change on investment returns and outlined how Calvert manages exposure to these risks.
“A carbon tax or similar policy signal could allow investors to better quantify the economic implications of climate change on investments and more efficiently allocate capital to investments suitable for the low-carbon economy,” Wilson said. He urged the subcommittee to support legislation that will allow key economic actors to rapidly scale existing efforts to address the significant risks posed by climate change.
“Calvert hopes that this [hearing] and similar efforts provide an opportunity for constructive dialogue on how to ensure that the capital markets have the best information and incentives to manage the uncertainties related to climate change,” he said.