G20 First steps to avoid 'sub-clime' crisis Media Release

Apr 03, 2009 - 11:52am

World leader meetings this year will need to strengthen the G20’s very welcome focus on better management of long-term risk if we are to avoid ‘sub-clime’ economic risks and drive investment in clean energy and other jobs, the Climate Institute said today.

 “There will be intensifying international scrutiny on the performance of G20 and other countries performance in integrating responses to the economic and climate crises,” Climate Institute CEO John Connor said.

“This will require integration of immediate and longer term climate risks into the improvements to international financial regulation as well as enhanced investment incentives to achieve the G20’s goal of a “resilient, sustainable and green recovery’”.

However, The Climate Institute described as “pivotal” G20 commitments for financial institutions, which include pension and super funds, to integrate and manage long-term risk.

“The implication of the G20’s pivotal decision is that super funds and other asset managers will be forced to align long term risk and opportunity, providing significant capital to help fund clean energy and other low-carbon infrastructure investments,” Mr Connor said.

“Our survey of the trillion dollar super funds industry in Australia showed a majority of funds were ill prepared to price and manage risks of climate change. There are parallels with the US sub-prime crisis, only now we’re sitting on a ‘sub-clime’ crisis that could melt our super nest eggs.”

Apart from the commitment on long term risks, the final G20 communique was short on detail for better aligning stimulus packages but committed members to

".... make the best possible use of investment funded by fiscal stimulus programmes towards the goal of building a resilient, sustainable and green recovery.  We will make the transition towards clean, innovative, resource efficient, low carbon technologies and infrastructure …  We will identify and work together on further measures to build sustainable economies."

After a preparatory meeting in Washington this month, world leaders, including Prime Minister Rudd, will be back together again in July in a President Obama driven Major Economies Forum on Energy and Climate. UN leaders will gather in New York in a climate focused September meeting with plans announced today for the G20 to meet again ahead of the critical UN climate talks in Copenhagen in December.

 “Australia’s performance will be determined by this month’s COAG meeting considering energy efficiency and renewable energy measures, next month’s Budget and the Senate’s debate on CPRS and relevant legislation,” Mr Connor said.

“Smart economic stimulus packages and climate change policies can produce double or even triple dividends – immediate job and economic growth in clean energy and climate friendly industries; efficiency driven lower energy costs and lower carbon pollution.”

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