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World's Largest Sovereign Wealth Fund to Invest in Clean Energy

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World's Largest Sovereign Wealth Fund to Invest in Clean Energy

How are investors, businesses and governments doing on the road to the Clean Trillion goal of $1 trillion per year invested in clean energy? Here are my thoughts on the progress and challenges we’ve seen recently.

Progress

Norway announced in March that it would require its $840 billion sovereign wealth fund (the largest in the world) to invest a portion of its assets in clean energy. This could lead to billions more per year in clean energy investment and is consistent with the recommendations in the Ceres report, Investing in the Clean Trillionto “develop capacity to boost clean energy investments and consider setting a goal such as 5 percent portfolio-wide clean energy investments.” Details are expected on Norway’s plans in April.

March was a great month for the journey to a 'clean trillion,' sparked by an upcoming investment from the world's largest wealth fund. Photo credit: daBinsi/Flickr Creative Commons

It’s not just the largest investors in the world that are investing in clean energy—businesses are ramping up investments too. Bloomberg reported that Google has invested more than $1.4 billion in clean energy since 2010, including almost $400 million in 2013 alone. On March 19, in a sign of the rapidly growing green bond market, Unilever issued a $415 million bond earmarked for reducing waste, water use and greenhouse-gas emissions.

Utilities are acting, too. In Texas, Austin Energy signed a 25-year agreement for solar power at below five cents per kilowatt-hour, a new record low. These company commitments are important in setting precedents for other businesses and showing that investing in clean energy has moved from “niche” to “mainstream.”

While the cost of solar is down, stocks are up: the 32 stocks in HSBC’s global solar index gained 65 percent in value for calendar year 2013 and the index is up 23 percent in the first few months of 2014.

Governments took positive steps last month, too. The European Union and U.S. issued a joint statement on March 26 that reaffirmed strong determination to work towards the adoption in Paris in 2015 of a global agreement on climate change with the “goal of limiting the global temperature increase to below 2 degrees Celsius …” The EU and U.S. agreed to continue “phasing out fossil fuel subsidies … promoting sustainable energy, energy efficiency and renewable energy, fighting deforestation and mobilizing private and public finance” among other measures.

Challenges

March began with the fossil fuel industry and its allies in Congress continuing their campaign to stop the Environmental Protection Agency (EPA) from setting limits on carbon pollution from electric power plants. Given that climate change legislation is not likely to pass Congress in the next two years, EPA limits are critical in reducing U.S. greenhouse gas emissions and accelerating the transition to a clean energy economy. The U.S. House of Representatives voted on March 6 to block a proposed EPA rule limiting carbon emissions from future coal-fired electricity plants. The bill is not expected to pass the Senate, and President Obama has threatened to veto.

March also marked the anniversary of the 1989 Exxon Valdez oil spill. In reflecting on the past 25 years since the spill, what is most exasperating is that the world has made so little progress in reducing our reliance on oil and other fossil fuels.

Today's share of fossil fuels in the global energy mix, at 82 percent, is the same as it was 25 years ago, according to the International Energy Agency. We need “stronger steps toward a cleaner, fossil fuel free future,” Ceres President Mindy Lubber wrote in a recent blog.

“We cannot afford another 25 years of incrementalism and dawdling.”

Ceres Developments

Ceres supported the Clean Trillion movement by focusing investor and business leaders on the risks of fossil fuels and the opportunities of the clean energy future. A few highlights:

First, ExxonMobil has committed to disclose the risks to its business model of factors such as declining oil demand, the growth of renewables and future limits on carbon emissions. Coal giant Peabody Energy has also agreed to issue a similar report. These agreements are a direct result of the Carbon Asset Risk initiative, coordinated by Ceres and Carbon Tracker, mobilizing $3 trillion worth of investors to challenge 45 of the world's largest oil and gas companies to prepare for the low-carbon future.

Second, there’s more shareholder activism on climate change and clean energy than ever before. Ceres announced that 35 institutional investors have filed 142 resolutions in a coordinated effort to spur action by 118 companies on climate change, clean energy and other issues.

Want to hear what investors, businesses, labor leaders and clean energy investment experts have to say about the Clean Trillion? Watch the brief video:

My Ceres colleagues and I welcome your thoughts and questions on Clean Trillion. Please feel free to connect with me at fox@ceres.org or on Twitter, @ChristopherNFox.

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In early October, Britain's Prince William teamed up with conservationist David Attenborough to launch the Earthshot Prize, a new award for environmentalist innovation. The Earthshot brands itself the "most prestigious global environment prize in history."

The world-famous wildlife broadcaster and his royal sidekick appear to have played an active role in the prize's inception, and media coverage has focused largely on them as the faces of the campaign.

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With more and more global attention on the climate crisis, celebrity endorsement of environmental causes has become more common. But why do environmental causes recruit famous faces for their campaigns? And what difference can it make?

'Count Me In'

"We need celebrities to reach those people who we cannot reach ourselves," says Sarah Marchildon from the United Nations Climate Change secretariat (UNFCCC) in Bonn, Germany.

Marchildon is a proponent of the use of celebrities to raise awareness of environmental causes. In addition to promoting a selection of climate ambassadors who represent the UN on sustainability issues, Marchildon's team has produced videos with well-known narrators from the entertainment world: among them, Morgan Freeman and Mark Ruffalo.

"We choose celebrities who have a lifestyle where they are already talking about these issues," Marchildon explains.

"Sometimes they reach out to us themselves, as David Attenborough did recently. And then they can promote the videos on their own social channels which reach more people than we do — for example, if they have 20 million followers and we have 750,000."

Environmental groups focused on their own domestic markets are also taking this approach. One Germany-based organization that uses celebrities in campaigns is the German Zero NGO. Set up in 2019, it advocates for a climate-neutral Germany by 2035.

German Zero produced a video in March 2020 introducing the campaign with "66 celebrities" that supported the campaign, among them Deutschland 83 actor Jonas Nay and former professional footballer Andre Schürrle. They solicit support as well as financial contributions from viewers.

"Count me in," they say, pointing toward the camera. "You too?"

"We are incredibly grateful for the VIPs in our videos," says German Zero spokeswoman Eva-Maria McCormack.

Assessing Success Is Complex

But quantifying the effectiveness of celebrity endorsement of campaigns is not a straightforward process.

"In order to measure effectiveness, first of all you need to define what is meant by success," says Alegria Olmedo, a researcher at the Zoology Department at the University of Oxford.

Olmedo is the author of a study looking at a range of campaigns concerning pangolin consumption, fronted by local and Western celebrities, in Vietnam and China. But she says her biggest stumbling block was knowing how to measure a campaign's success.

"You need a clear theory of change," explains Olmedo. "Have the celebrities actually helped in achieving the campaign's goals? And how do you quantify these goals? Maybe it is increased donations or higher engagement with a cause."

A popular campaign in China in recent years saw famous chefs Zhao Danian and Shu Yi pledge to abstain from cooking endangered wildlife. While the pledge achieved widespread recognition, both Olmedo and Marchildon say it's difficult to know whether it made any difference to people's actions.

"In life we see a thousand messages every day, and it is very hard to pinpoint whether one campaign has actually made a difference in people's behavior," she explains.

Awareness Is Not Enough

Many campaigns that feature celebrities focus on raising awareness rather than on concrete action — which, for researcher Olmedo, raises a further problem in identifying effectiveness.

"Reach should never be a success outcome," she says. "Many campaigns say they reached a certain number of people on social media. But there has been a lot of research that shows that simply giving people information does not mean they are actually going to remember it or act upon it."

But anecdotal evidence from campaigns may suggest reach can make an active difference.

"Our VIP video is by far the most watched on our social media channels," McCormack from German Zero says. "People respond to it very directly. A lot of volunteers of all ages heard about us through that video."

However, some marketing studies have shown that celebrity endorsement of a cause or product can distract from the issue itself, as people only remember the person, not the content of what they were saying.

Choosing the Right Celebrity

Celebrity choice is also very important. Campaigns that use famous faces are often aiming to appeal to members of the public who do not necessarily follow green issues.

For certain campaigns with clear target audiences, choosing a climate scientist or well-known environmentalist rather than a celebrity could be more appealing — Attenborough is a classic example. For others, images and videos involving cute animals may be more likely to get a message heard than attaching a famous face.

"We choose celebrities who have a lifestyle where they are already talking about these issues," says Marchildon from the UN. "You need figures with credibility."

McCormack cites the example of Katharine Hayhoe, an environmental scientist who is also an evangelical Christian. In the southern United States, Hayhoe has become a celebrity in her own right, appealing to an audience that might not normally be interested in the messages of climate scientists.

But as soon as you get a celebrity involved, campaigns also put themselves at risk of the whims of that celebrity. Prince William and younger members of the royal family have come under fire in recent years for alleged hypocrisy for their backing of environmental campaigns while simultaneously using private jets to fly around the world.

But Does It Really Work?

While environmental campaigns hope that endorsement from well-known figures can boost a campaign, there is little research to back this up.

"The biggest finding [from my study] was that we were unable to produce any evidence that shows that celebrity endorsement of environmental causes makes any difference," says Olmedo.

This will come as a blow to many campaigns that have invested time and effort into relationships with celebrity ambassadors. But for many, the personal message that many celebrities offer in videos like that produced by German Zero and campaigns like the Earthshot Prize are what counts.

The research may not prove this conclusively — but if the public believes a person they respect deeply personally cares about an important issue, they are perhaps more likely to care too.

"I personally believe in the power this can have," says Marchildon. "And if having a celebrity involved can get a single 16-year-old future leader thinking about environmentalist issues — that is enough."

Reposted with permission from DW.

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