Investors With $12 Trillion Call for Green EU Recovery Plan

(Bloomberg) -- Global investors managing 11 trillion euros ($12 trillion) are demanding a rapid green recovery in Europe to avoid worsening financial, health and social problems.

In an open letter, investors including BNP Paribas Asset Management and Schroders Investment Management called for money to be poured into clean infrastructure, such as electric cars and wind turbines, as well as flood defenses and crop resilience that will protect people from the worst impacts of climate change.

Central bankers from the U.K., France and the Netherlands added their voice in an op-ed in the Guardian newspaper, which called the aftermath of the coronavirus crisis a “once-in-a-lifetime opportunity” to prepare for climate change.

European leaders will meet on June 19 to discuss a 750 billion-euro recovery fund proposed by the European Commission. It's the world's greenest stimulus plan to deal with the economic devastation caused by the pandemic. But even if EU leaders give the go-ahead, negotiations for the budget will continue for several months.

The investor letter with 109 signatories said EU countries should adopt the Commission's plans and go further with their own national strategies. A key demand of the group is to attach green strings to any financial support given to polluting industries such as airlines, in line with a goal to zero out emissions by 2050.

“As a prudent investor, we need to make sure our investments are sustainable in the long run and do not end up as stranded assets,” said Dewi Dylander, deputy executive director at Danish pension fund PKA, which is a signatory of the letter and manages 44 billion euros, of which 9.7% are green.

Dylander, who is also a former head of the Danish government's climate negotiations, said Europe's green recovery would also spur other countries to follow suit. Europe was due to host global climate change negotiations this year in Glasgow, Scotland, but they have now been pushed back to November 2021 because of the pandemic.

While the EU is “sending all the right signals,” details of specific policies are still lacking, said Stephanie Pfeifer, chief executive officer of the Institutional Investors Group on Climate Change, which organized the letter. “There is more work to do on that to send the right market signals.”

In their op-ed, Bank of England Governor Andrew Bailey, Bank of France Governor Francois Villeroy de Galhau, Netherlands central bank's Frank Elderson, and United Nations Special Envoy Mark Carney pledged to work together and use their financial stability mandates and expertise to ensure climate risks are effectively managed.

“Unless we act now, the climate crisis will be tomorrow's central scenario and, unlike Covid-19, no one will be able to self-isolate from it,” they wrote. “We have a choice: rebuild the old economy, locking in temperature increases of 4C with extreme climate disruption; or build back better, preserving our planet for generations to come.”