Mar 08.qxd - Connection Magazine

Gore Warns on ‘Subprime Carbon’ Industry
AL GORE ADVISED Wall
Street leaders and institutional
investors to ditch businesses
too reliant on carbon-intensive
energy—or, prepare for huge
losses down the road.
“You need to really scrub your
investment portfolios, because I
guarantee you, as my longtime good
redneck friends in Tennessee say, I
guarandamntee you, that if you real-
$129,000
ly take a fine-tooth comb and go
through your portfolios, many of you
are going to find them chock-full of
subprime carbon assets,” the former
vice president said.
Carbon dioxide from burning
fossil fuels is the leading component
of “greenhouse gases,” which scientists
say are playing a key role in
warming the globe.
Gore’s remarks before a highprofile
business crowd that collectively
controls some $20 trillion in
capital were intended to unleash a
financial ripple effect that could
force the world to start putting a price
on carbon emissions.
Gore, who shared the Nobel
Peace Prize for his efforts to warn
about climate change, compared the
financial risks facing investors in
carbon-using industries with the
meltdown in the market for subprime
mortgages given to people with
blemished credit records or low
incomes.
“Similarly, the assumption that
you can safely invest in assets that
come from business models that
assume carbon is free is an assumption
that is
about to go
splat,” he
said. “You
have lots of assets,
many of you do,
in your portfolios
right now that
truly do deserve
that epithet ‘subprime.”’
The U.N.
played host to
nearly 500 prominent financial leaders
and institutional investors who came
searching for insights on shifting business
currents as the world shifts to
cleaner energy sources and fuels.
Fifty U.S. and European institutional
investors managing $1.75 trillion
in assets agreed to invest $10 billion
more in energy efficiency and
“clean energy” technologies over the
next two years and to aim for a 20
percent reduction in energy from
core real estate investment holdings
over three years. California State
Treasurer Bill Lockyer said his
state’s leading pension funds would
invest more than $800 million in
environmental technology with similar
aims.
A report by the McKinsey
Global Institute released at the U.N.
conference
said major
investments
over the next
decade in
boosting the
output from
various types
of energy that
consumers use
could earn
investors double-digit
rates
of return.
“As soon
as people
believe carbon
has a price, it’s
going to have
a price,” said
Page 4 ▲ The Connection Magazine ▲ www.theConnect.com ▲ March — April 2, 2008
Vinod Khosla, a venture capitalist
who was one of the co-founders of
Sun Micro-systems.
Peter Darbee, chairman and
CEO of PG&E Corp., an energybased
company in San Francisco, said
cleaner-burning utilities should be
rewarded and “those that burn coal
should have to pay for clean energy.”
The conference, which followed
three days of debate in the U.N.
General Assembly on what to do
about climate change, was organized
by three groups that support the
United Nations—the U.N.
Foundation, Ceres and the U.N. Fund
for International Partnerships.
Mindy Lubber, president of
Ceres’ investor coalition, called it the
largest meeting of financial leaders to
focus on climate change.
At the last such meeting in
2005, participants pledged to invest
$1 billion in clean energy technologies
and followed up by doing that in
less than a year.
“The shift towards a greener
future is still in its infancy and needs
nurturing,” U.N. Secretary-General
Ban Ki-moon, who was in
Washington, told participants
Thursday through a spokesperson.
“While the world looks to the U.N. to
steward the negotiating process, the
United Nations looks to you, as leaders
in the financial sector, to lead in
innovating financing and technological
development.”
In December, U.N.-sponsored
climate talks in Bali, Indonesia, produced
a “Bali Roadmap” for new
negotiations intended to produce a
global treaty on reducing greenhouse
gases. It would replace the Kyoto
Protocol, which covers just 37 industrial
nations and expires in 2012.
Printed with permission from
The Associated Press.
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