When it comes to stopping climate change, there is no getting around the big money. Only if the investment flows can be diverted - away from climate-damaging sectors such as the coal industry, towards more climate-friendly technologies - will the economy really change direction.
The German Stephanie Pfeifer is the head of the Institutional Investors Group on Climate Change (IIGCC), an association of almost 200 major European investors who actively advocate stricter climate protection. The network includes, among others, the Deutsche Bank fund company DWS, the asset management subsidiaries of Allianz and the German Volksbanken as well as some of the financially strongest pension funds in Europe.
The organization recently coordinated an appeal to the world's heads of state and government in which 631 major investors demanded quick CO2 pricing and the end of all coal-fired power plants.
SPIEGEL met Stephanie Pfeifer on the edge of the Madrid climate summit. In an interview, she explains why large investors do not necessarily act altruistically if they focus more on climate protection - but above all pursue their own interests.
SPIEGEL: Ms. Pfeifer, why are so many financial groups now publicly campaigning for climate protection? Have you discovered your good heart and want to save the world?
Stephanie Pfeifer: Our members have many motives. But most of all is about their own finances. Because climate change threatens financial stability and economic growth. It creates new, unpredictable risks. And it can massively damage the business of our members.
SPIEGEL: How, for example?
Pfeifer: For example, the large shopping center you just invested in is flooded. Or, as an insurance company, you have to make ever higher claims payments for natural disasters. And what if the consequences of climate change intensify so that politicians make an abrupt turnaround, for example by suddenly adopting an extremely high CO2 tax or switching off coal-fired power plants?
SPIEGEL: Then your investors or the companies in which they are involved are sitting on worthless assets at a stroke.
Pfeifer: On the other hand, the fight against climate change can create sustainable growth. The transformation to a low-emission global economy opens up countless business opportunities: regenerative energies, energy efficiency, large infrastructure projects and much more. A group of Danish pension funds, including many of our members, recently announced that they would invest 50 billion euros in green technologies. Because it is clear that the global economy must and will steer in this direction.
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SPIEGEL: 50 billion euros sounds like a lot of money. But is only a fraction of the amounts that financial groups have still invested in oil or coal companies.
Pfeifer: There are many more examples of investments in transformation. But it's true: we are just at the beginning. The cash flows have to be redirected even more, away from the brown economy into the green economy. It is our job to work with investors, companies and politicians to ensure that much more private capital goes into this transformation - and thus accelerates it. This is crucial, only in this way can this turnaround succeed. In the end, it always depends on the money.
SPIEGEL: Nice words. But you often get the impression that corporations like to do green washing, that is to say they act much greener than they really are with targeted publicity campaigns.
Pfeifer: As I said, investors are primarily concerned with their own finances. But there are also people behind financial groups - investors, contributors, partners, employees. And climate change is a big issue for more and more of these people. A 30-year-old employee who pays his contributions to a pension fund today does not want to retire in a four degree hotter world. This awareness is growing rapidly.
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SPIEGEL: Also because of the "Fridays for Future" protests?
Pfeifer: The protests have created a whole new dynamic. CEOs also have children and grandchildren. Climate change is a big issue for every institutional investor today. It is clear to everyone that there will be major changes in the economic and energy system and that they will have to adapt to it.
SPIEGEL: Until a few years ago, it was very different. What triggered the change?
Pfeifer: Mark Carney had a crucial role ...
SPIEGEL: ... the outgoing head of the British central bank.
Pfeifer: In 2015, he warned about the consequences of climate change for the financial industry in a well-received speech at the Lloyds insurance group in London. And he also showed strategies to reduce the risk. This has made many people in this sector think.
SPIEGEL: What role does growing regulatory pressure play? France is now requiring institutional investors and asset managers to disclose their risks from climate change. Such a law could soon also exist in Great Britain. London has asked listed companies to publicize their climate risks by 2022 at the latest.
Pfeifer: Regulation forces investors to deal with these risks - even with the companies to which they entrust capital. Together with our members and four other networks, we launched the Climate Action 100+ initiative; 370 investors with assets under management of $ 35,000 billion have signed it. The initiative is aimed at the 100 companies with the largest emissions worldwide and 61 other large companies. Investors from our network contact these companies and ask them to reduce their greenhouse gas emissions and to bring their business model in line with the goals of the Paris climate agreement.
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SPIEGEL: Not every corporation addressed will like this interference. How do your investors do it?
Pfeifer: At the beginning there is often dialogue. Of course, some companies react more slowly than others, and some also resist. In principle, investors have the option of increasing pressure in the event of conflicts: for example, by passing certain key motions at a general meeting or voting against the re-election of a manager. And of course they could also withdraw all of their money from a company.
SPIEGEL: Has your initiative already had concrete success?
Piper: Yes. For example, Shell and investors from Climate Action 100+ have agreed that the company will set climate targets for the next three to five years - and significantly reduce its ecological footprint by 2050. BP in a resolution called on Investors in Climate Action 100+ to align its climate strategy with the Paris Agreement; management later backed them up. Several groups that Climate Action 100+ is targeting have recently set themselves the goal of becoming climate-neutral: for example Thyssenkrupp, Volkswagen, Daimler, Nestlé or most recently the Spanish mineral oil giant Repsol.
SPIEGEL: All because of your investors?
Pfeifer: It is not always clear how these decisions were ultimately made and what share our investors had in them. One thing is certain: the global economy is facing far-reaching changes. Those companies that prepare for it in time and adapt will survive. Others may not. It is in the interests of companies to change.
