Thank you, Mr. Chairman. I appreciate your convening today's panel on investor risk and climate change. While over the past few years we have already heard from many witnesses about the range of promising technologies to control pollutants from power plants, we have not yet heard about these issues from the perspective of investors. I am particularly pleased that Denise Nappier, the esteemed treasurer of my state of Connecticut, was invited to speak on this matter. I trust she will give an eloquent and persuasive presentation.
As you well know, Mr. Chairman, I have long been concerned about the growing threat of global climate change and our nation's resistance to taking credible action to counter it. The science is now overwhelming and indisputable: carbon dioxide emissions are heating up the planet, and the longer we do nothing, the worse it will get. That is why I have introduced the Climate Stewardship Act with Senator McCain-the only legislative proposal on the table that would actually stem the increase of our nation's greenhouse gas emissions-and, with Senator Jeffords, have introduced the Clean Power Act, which would cut the emission of major pollutants from the nation's power plants.
But the Bush Administration's do-nothing policy on climate change is much more than a mammoth environmental problem. It also creates two other kinds of problems.
First, a foreign policy problem. Just this Tuesday, a troubling poll from the Pew Center for the People and the Press confirmed once again that our great nation's stature in the world is shrinking. Some attribute our loss of stature solely to the war in Iraq, but that's just not the case. Removing Saddam Hussein was the right thing to do, and much of the world will come to respect us for acting on principle. No, the core problem is that the world sees an American administration that on a broad range of issues is happy to lecture but not willing to listen. As Tony Blair has said, America must not only speak to the world. To truly lead, we must hear the concerns of our friends and allies, including the outpouring of concern about climate change and the consequences of America, the world's largest emitter of carbon dioxide, doing nothing to stem it. The fact is, America produces about a quarter of the world's greenhouse gases, but under the Bush Administration's neglectful watch has shown an unwillingness to produce any of the world's climate change solutions.
And second, the Bush Administration's neglectful approach to climate change creates a big economic problem. The ongoing regulatory uncertainty produced by the Bush Administration's refusal to act leaves businesses waiting, wondering, and spinning their wheels rather than making the long-term investments today that they would make if they were confident of how government would approach this problem. When it comes to climate change laws, businesses deserve more than instructions to place their fingers in the wind. They deserve an answer from us in Washington so that they can get down to the business of serving their customers, producing profits, and creating jobs.
Institutional investors see the problem quite clearly. Treasurer Nappier, for instance, is the steward of some $17 billion in pensions that are the nest egg of Connecticut's working families. Unfortunately, as we will hear from her, her ability to invest that money wisely has been impaired by the now chronic uncertainty surrounding what companies' obligations will be to abate climate change.
Mr. Chairman, my staff has talked with many investment analysts on Wall Street who tell the same story. There is a general understanding that constraints on greenhouse gases are an inevitable fact of the future. Analysts understand the size and the scope of the global warming problem and understand that America cannot keep its head in the sand forever. They understand that the climate is changing and executives are willing to invest in solutions-but they will put off those investments if they think the regulatory climate will keep changing each step of the way.
The Coalition for Environmentally Responsible Economies (CERES), a coalition of environmental, investor and advocacy groups, has long warned us of the strong link between climate change and investment risk. In its April 2002 report, Value at Risk: Climate Change and the Future of Governance, CERES warned that "there is mounting evidence that failure to respond to the risks posed by climate change could result in multi-billion dollar losses for U.S. businesses and investment portfolios." The report found a pressing need for corporate leaders and institutional investors to tackle climate change more aggressively, noting that "it is increasingly evident that the costs of inaction are likely to far outweigh the costs of action." The report went further to state that "climate change represents a potential multibillion dollar risk to a wide variety of businesses and industries. It should, therefore, command the same level of attention and urgency as any other business risk of this magnitude." Mr. Chairman, I ask unanimous consent for this report to be entered into the record.
The World Resources Institute also released a recent evaluation of the effects of climate change on shareholder value, in this case the value of oil companies. WRI found that different oil companies were positioned very differently on this issue, depending on how each company had hedged its risks in anticipation of policies to address global warming. For the companies that had acted wisely, WRI saw little impact; for those that had not done so, WRI saw a loss of more than 6 percent in shareholder value. Mr. Chairman, I ask unanimous consent for this report to be entered into the record as well.
Finally and most recently, CERES conducted a yearlong dialogue among experts in the electric power sector, investors, and environmentalists on the issue of climate change. The resulting report, The Electric Power Sector, Investors, and Climate Change, due to be released today, concludes that the inevitable rise of carbon-regulating legislation, along with the direct financial consequences of climate change, justifies corporate and investor action. This problem, CERES has found, crosses industry and sector lines, and presents serious risks for all corporate shareholders alike.
Climate change is real and must be addressed. The heat is on the Administration to do something, do something decisive, do something credible, and do something soon. What John McCain and I have proposed is a moderate, measured, and market-based response to get us on the right track without creating a shock to our economy. It would help, not hurt, businesses crying out for a hint of what is to come. It would improve America's stature in the world. And most of all, it would protect America from the growing environmental threat posed by global warming.