Call for 5% pension fund injection in green economy by 2015

International climate change policy must overcome financial and regulatory barriers if the green economy is to flourish, according to the International Trade Union Confederation (ITUC).

In its latest report ITUC warns that the climate change agenda faces two major challenges from the G20 financial reform agenda.

These include the absence of a strong regulatory framework for effective emissions reductions and the lack of financial resources to implement emission reduction and adaptation policies with a specific focus on the developing world.

However, analysis from ITUC has shown that that the green economy could be given $301bn (£197m) boost from pension funds alone – if barriers to investment are overcome.

As a result, ITUC is calling for an investment of 5% from pension fund portfolios to be made to green investments by 2015. Currently just 0.3 – 0.5% of portfolio pension funds are contributed to clean energy infrastructure worldwide.

ITUC general secretary Sharan Burrow said that the low level of portfolio holdings in longer-term green economy investments is a “critical concern”.

She said: “We need 50% more food, 45% more energy and 30% more water by 2050. There is a both an imperative and an opportunity to invest in the green economy to create sustainable decent jobs.

“Not enough money is being invested in emission reduction and adaptation policies. While governments and other financial institutions should take the lead – the pension fund industry can play a key role.”

In addition, the report claims that barriers to climate change investment come from the limited availability of climate change investment products and the post-G20 financial reform agenda.

And while it states that “climate change financing is and should remain firmly in the hands of governments”, it also believes that private institutional investors “can and should have a role as well given the change in scale that is needed – a role that complements, not substitute to government”.

Ms Burrow added: “The post-G20 financial reform agenda has been designed in a way that does not sufficiently take on board climate-change financing priorities, and could slow the flow of green debt and equity financing.

“Working people have a stake in the success of their pension funds – to create jobs, to provide a secure retirement income for working people and to sustain our planet.”

Carys Matthews

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