Deutsche Bank Asset Management (DeAM) global head Kevin Parker has spoken at an influential United Nations conference about the key role the mutual funds industry can play in helping the global economy tackle climate change.
Parker told delegates at the UN Investor Summit on Climate Risk in New York that asset managers, who oversee about $26 trillion in mutual funds worldwide, could use this money to support companies that are responding best to climate change.
He also took the opportunity to announce that DeAM, which has about $815 billion in assets under management globally, had signed the UN Principles for Global Investment (UN PRI) and Investor Network on Climate Risk (INCR).
“Climate change will affect almost every industry and region. The mutual fund industry can facilitate and accelerate this process, first by developing investment strategies and products that take account of the impact of climate change and, second, by helping investors to better understand this phenomenon and how it influences their investment decisions.”
Parker said that climate-related funds in DeAM’s retail fund business, DWS, had grown from about $10 billion to about $11 billion in the year ended December 2007.
“There is a common misconception that a trade-off exists between environmentally responsible investing and strong investment performance. I believe that, on the contrary, it is a win-win for fund investors and businesses, as investor capital is channelled towards companies that profit from adapting to and mitigating climate change. Climate change is going to be one of the dominant investment themes of the foreseeable future.”
Parker said he believes socially responsible investment opportunities will improve further when more people realise that alternative energy sources can be cheaper than fossil fuels – and, of course, better for the environment.
“[A] system of pricing carbon in response to government regulation that takes account of [external costs of fossil fuels, such as pollution] is spreading through global financial markets. This will inevitably make alternative energy technologies far more economically competitive with fossil fuels.”
The UN PRI has about 200 signatories representing more than $10 trillion in assets under management and provides a framework to help investors integrate environmental, social and corporate governance (ESG) issues into their activities.
The INCR includes more than 60 investment institutions that collectively manage nearly $5 trillion in assets and promotes awareness of the financial risks and opportunities posed by climate change.