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Companies increasingly at risk for climate change litigation says UN mongabay.com December 5, 2005 SUMMARY: Companies which contribute to climate change will increasingly face legal action according to a U.N.-sponsored report accounced last week but scheduled for release in March 2006. London-based law firm Freshfields is working with Dutch bank ABN Amro to produce the U.N. report which aims to encourage investors to address environmental, social and governance issues in their investment decisions. Below is the news released from UNEP. United Nations Environment Programme Finance Initiative news release November 29, 2005. A powerful alignment of legal, financial, and investment interests will see USD trillions directed in the next decade to evolving markets linked to climate change, clean technology and sustainable use of natural resources, a report being prepared for the United Nations predicts. "The Working Capital Report", to be published for the first time in March 2006 by the United Nations Environment Programme Finance Initiative (UNEP FI*), is the culmination of a series of landmark studies undertaken during 2004-5 (see reports listed*). This series of UN-backed studies explores the role of financial service companies and capital markets, and the legal context in which they operate, as they capitalise on new opportunities linked to the concept of sustainable development and more effective management of associated risks. "There is no question that 2005 will be seen as the watershed when the mainstream banking, insurance and investment worlds realised the scale of the commercial opportunities unfolding in the new carbon, clean-tech and sustainable natural resource markets and, also, the legal risks of not being a leader in this area," explained Klaus Toepfer, Executive Director of the United Nations Environment Programme. To illustrate the potential of the new global markets, the UNEP head explained that financial institutions working with UNEP predicted that greenhouse gas emissions trading markets could reach USD 2 trillion a year by 2012 and that the market providing finance for clean energy technologies could reach USD 1.9 trillion by 2020. "Next week in Montreal at the international climate negotiations, the financial service companies in the UNEP FI partnership will ask governments for two key things: to provide early, clear guidance on the continuation of international climate policy regime beyond 2012; and to foster an appropriate framework to ensure a liquid and efficient global carbon market" explained the UNEP Executive Director. "They will also be looking for countries to meet their emissions reduction commitments under the Kyoto Protocol and a clear signal that nations will go beyond these post 2012 according to the principle of common but differentiated responsibilities," he added.
"What was once considered a niche area is set to become mainstream as institutions with trillions of dollars under management embed ESG thinking into their investment approach." added Mr. Toepfer. The Freshfields study is entitled: "A legal framework for the integration of environmental, social and governance issues into institutional investment". Freshfields undertook the work on behalf of the Asset Management working group of UNEP FI, a public-private partnership between UNEP and more than 170 banks, insurers and asset managers worldwide. The report, which focuses on the largest capital markets jurisdictions - Australia, Canada, France, Germany, Italy, Japan, Spain, the United Kingdom and the United States - also, considers the likely evolution of the interpretation of the law with respect to investors and ESG issues. Paul Watchman, Partner at Freshfields Bruckhaus Deringer and senior author of the study, commented: "The report confirms that a number of the perceived limitations on the integration of ESG issues into investment decision-making are illusory. Far from preventing the integration of ESG considerations, the law clearly permits and, in certain circumstances, requires that this be done. This legal interpretation has far-reaching implications for the institutional investment community worldwide." "The globe is warming, fast, and deep ocean warming is changing the climate. In just two decades damages from weather extremes have skyrocketed 50-fold. The "Freshfields" report provides the basis for institutional investors to redirect practices and products to accelerate the clean energy transition, and policies that form the scaffolding for healthy, equitable and sustainable development, "commented Paul R. Epstein, M.D., M.P. H., Associate director, Center for Health and the Global Environment, Harvard Medical School. SHARE THIS ARTICLE:
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