This letter was published by the Guardian today:
Laudable and crucial as Lord Stern’s and Carbon Tracker’s warnings are (Carbon bubble ‘creates global economic risk’, 19 April), their success will depend on the existence of a plausible, large-scale investment alternative that can provide secure returns. Without this, investors’ money will continue to fuel the overheating of the planet.
The role of pension funds is crucial here since they are heavily dependent on fossil-fuel investments to finance their present and future pensioners’ needs. Two areas that would provide the stable long-term income they require are energy efficiency in buildings and renewables. Investment in the former would be repaid out of the resulting lower fuel bills and would have the additional bonus of creating a huge range of jobs and a new career path in every town and city.
In terms of investing in renewables, repayments would be made via energy bills and government-backed payment mechanisms, as is the case today. These are lower risk and less volatile options than the stock market and, as such, pension funds should reduce their expected levels of returns from them and compensate for this by a huge increase in such low-carbon investments.
Following such a climate-friendly programme would enable pension funds to wean themselves off their eventually doomed fossil fuel portfolios. In addition, this approach will provide baby boomers with a safe refuge for their pensions, provide their children and grandchildren with much-needed jobs and future generations could be spared an inhospitable planet – a real example of intergenerational solidarity.
Colin Hines
Convenor, Green New Deal Group