May 20, 2008 The Honorable Harry Reid The Honorable Mitch McConnell Majority Leader Minority Leader United States Senate United States Senate S-221 U.S. Capitol Building S-230 U.S. Capitol Building Washington, D.C. 20510 Washington, D.C. 20510 Dear Majority Leader Reid and Republican Leader McConnell: We are more than 50 treasurers, comptrollers, institutional investors, asset managers, venture capitalists and other leaders managing collectively over $2.3 trillion in assets. We are writing to urge you and your colleagues to pass strong national climate legislation when it is brought to the Senate floor in the coming weeks. Last March 2007, leading investors along with CEOs of a dozen U.S. businesses issued a call for: (1) a mandatory national policy to contain and reduce national greenhouse gas emissions economy-wide to levels called for by scientists and climate models, (2) the realignment of incentives and national policies to achieve climate objectives, and (3) guidance from the Securities and Exchange Commission (SEC) to improve corporate disclosure of material climate risks (attached). These requests were echoed in the Investor Network on Climate Risk (INCR) Action Plan released on February 14, 2008 (attached). INCR is an alliance of institutional investors focused on the business impacts of climate change. We repeat and strengthen these calls now. In both statements investors called for 60–90% cuts in greenhouse gas emissions below 1990 levels by 2050. Today we are calling on Congress to set a target and timetable to reduce emissions consistent with the most widely-accepted science. Last year’s reports from the Intergovernmental Panel on Climate Change (IPCC), the world’s leading body of climate experts, suggest 25–40% reductions by 2020 and 80–95% reductions by 2050 will be needed to avoid the most harmful impacts. Federal legislation to address climate change will provide legal, regulatory, and market certainty. For instance, many U.S. businesses are confronting an increasingly complex patchwork of regulations at the state and local level; federal legislation could provide the national minimum baselines that can guide corporate and investor action, even as some states pursue more stringent regimes. Establishing a national framework for significant emissions reductions will not only help asset managers and institutional investors manage climate risks and opportunities, but also will help to repair a serious and growing threat to the global competitiveness of U.S. businesses in a world where the energy- and carbon-intensity of companies’ products, services, and supply chains is increasingly important. Federal climate legislation with strong market-based mechanisms will facilitate greater investment in clean technologies and other climate change solutions and will enable the U.S. not only to compete globally, but to lead. We also recognize that the Securities and Exchange Commission and other financial regulatory bodies must better define the material issues related to climate change and clarify what companies should disclose with respect to climate change in their regular financial reporting. This will help investors understand the risks and opportunities that businesses face—and will help them determine with more accuracy the level of climate risk and opportunity in their investment portfolios. We hope you will press the SEC to promptly issue guidance on corporate disclosure of climate risk, or include this issue in comprehensive legislation to address climate change. Left unattended, risks from severe weather, extended droughts, sea-level rise, and other effects of climate change will worsen over time as discussed in last year’s IPCC report, harming company assets, global investment portfolios, ecosystems, and human lives. While there are costs involved in mitigating greenhouse gas emissions, U.S. government inaction is costlier. Emissions reductions can be planned, the costs phased in over time and consequent inequities addressed, but in the midst of an extreme weather event or a drought, such planning and foresight are impossible. There are also significant economic opportunities here, but in the current unpredictable national climate policy environment, it is difficult and risky for businesses to justify the large-scale, long-term capital investments needed to seize existing and emerging opportunities to transition to a clean, low-carbon economy. With the proper incentives and market conditions, we are confident that business opportunities could expand dramatically, low-carbon technologies that are available today could be broadly deployed, and significant reductions in emissions could be achieved over the next few decades—all while creating vast economic opportunities and new jobs for Americans. Delay is no longer an option, as opportunities will be squandered and the risks and economic cost of inaction will only continue to grow. Now is the time for Congress to demonstrate America’s leadership and commitment to reducing greenhouse gas emissions domestically for the sake of American businesses, industry, and citizens—to protect our environment and economy. We look forward to working with you and your colleagues as you move expeditiously toward establishing the strong, clear, and stable national legislative framework needed to address this most pressing issue. In the meantime, please do not hesitate to contact Mindy Lubber, Director of the Investor Network on Climate Risk (INCR), at (617) 247-0700 ext. 30 or via e-mail at [email protected] with any questions or for further information. Sincerely, PENSION FUNDS, STATE TREASURERS, AND STATE / CITY COMPTROLLERS California Public Employees' Retirement System John Chiang, California State Controller California State Teachers' Retirement System Bill Lockyer, California State Treasurer Connecticut Retirement Plans and Trust Funds Alex Sink, Florida Chief Financial Officer Page 2 Nancy K. Kopp, Maryland State Treasurer Timothy P. Cahill, Massachusetts State Treasurer Orin S. Kramer, Chair, New Jersey State Investment Council William G. Clark, Director, New Jersey Division of Investment William C. Thompson, New York City Comptroller Thomas P. DiNapoli, New York State Comptroller Richard Moore, North Carolina State Treasurer Randall Edwards, Oregon State Treasurer Robin L. Wiessmann, Pennsylvania State Treasurer Frank Caprio, Rhode Island General Treasurer Stephen Abrecht, Service Employees International Union Master Trust Fund Jeb Spaulding, Vermont State Treasurer Joseph A. Dear, Executive Director, Washington State Investment Board ASSET MANAGERS, VENTURE CAPITALISTS, AND FINANCIAL SERVICES FIRMS Geeta Aiyer, President, Boston Common Asset Management Bennett Freeman, Senior Vice President for Social Research and Policy, Calvert Asset Management Company Mike Johnston, Executive Vice President, The Capital Group Companies (firm name for identification purposes only) Mindy S. Lubber, President, Ceres and Director, Investor Network on Climate Risk Francis G. Coleman, Executive Vice President, Christian Brothers Investment Services Kevin Parker, Global Head of Asset Management, Deutsche Bank Adam M. Kanzer, Managing Director & General Counsel, Domini Social Investments Alain Grisay, CEO, F&C Investments Generation Investment Management Kristina Curtis, President, Green Century Funds Vinod Khosla, Founder, Khosla Ventures Peter D. Kinder, KLD Research & Analytics, Inc. L. John Doerr, Partner, Kleiner Perkins Caufield & Byers Jonathan Naimon, CEO, Light Green Advisors Rob O. Challis, Global Head of Corporate Responsibility, Man Group Page 3 Mark Schwartz, Chairman, MissionPoint Capital Partners Joseph Keefe, CEO, Pax World Funds Stephen Dodson, President, Parnassus Funds Joan Bavaria, President, Trillium Asset Management Tim Smith, Director of Socially Responsive Investing, Walden Asset Management Jack Robinson, President and CIO, Winslow Management Company FOUNDATIONS, ENDOWMENTS AND OTHER INSTITUTIONAL INVESTORS Pam Solo, President, Civil Society Institute Jesse Fink, President, Betsy and Jesse Fink Foundation Germeshausen Foundation Rev. William Somplatsky-Jarman, Presbyterian Church (U.S.A.) Michael Crosby, OFMCap, The Province of St. Joseph of the Capuchin Order Sisters of St. Francis of Dubuque, Iowa Barbara Kraemer, OSF, U.S. Provincial, School Sisters of St Francis, Milwaukee, Wisconsin Patricia A. Daly, OP, Executive Director, Tri-State Coalition for Responsible Investment Timothy Brennan, Treasurer, Unitarian Universalist Association Timothy E. Wirth, President, United Nations Foundation V. Kann Rasmussen Foundation Wren W. Wirth, President, The Winslow Foundation Page 4.