According to the head of Deutsche Bank’s Asset Management division, the fund industry will play a key role in dealing with climate change.

Speaking this afternoon at the United Nations Investor Summit on Climate Risk in New York, Deutsche’s Kevin Parker was to tell the conference that the mutual fund industry can help the global economy respond to the challenge of climate change.

Parker, global head of DeAM and a member of the bank’s group executive committee, says, “Climate change will affect almost every industry and region. The mutual fund industry can facilitate and accelerate this process, first by developing investment strategies and products that take account of the impact of climate change, and second by helping investors better understand this phenomenon and how it impacts their investment decisions.”

“There is a common misconception that a trade-off exists between environmentally responsible investing and strong investment performance. I believe that, on the contrary, it is a win-win for fund investors and businesses as investor capital is channeled towards companies that profit from mitigating and adapting to climate change. Climate change is going to be one of the dominant investment themes of the foreseeable future. It will be an important source of potential returns,” he added.

“The investment opportunities will improve radically when we overcome a further misconception: that fossil fuels are cheap compared with alternative energy. The apparent price differential is illusory because the ‘externalities’ of fossil fuels are not normally priced in – for instance, the cost of cleaning up the pollution they cause. However, in response to government regulation, a system of pricing carbon that takes account of these externalities is spreading through global financial markets. This will inevitably make alternative energy technologies far more economically competitive with fossil fuels,” Parker said.

He also announced that DeAM has signed up to the UN Principles for Responsible Investment, which provide a framework to help investors integrate environmental, social and corporate governance considerations into their investment activities. At the start of 2008, the UN PRI had almost 200 signatories, representing more than $10 trillion of assets under management.

To encourage investor awareness, DeAM has also joined the Investor Network on Climate Risk. INCR is a global network of institutional investors and financial institutions that promotes understanding of the financial risks and investment opportunities posed by climate change. It now includes more than 60 investment institutions collectively manage nearly $5 trillion of assets.