An influential coalition of investors has this week called on the US Senate to deliver binding emission reduction targets or risk undermining firms' long-term competitiveness.

The group of more than 50 institutional investors, including Deutsche Asset Management, F&C Asset Management, and the world's largest hedge fund the Man Group, wrote to senate majority leader Harry Reid and senate minority leader Mitch McConnell, calling for a national climate policy to reduce US greenhouse gas emissions by between 60 and 90 per cent below 1990 levels by 2050.

The targets are in line with those proposed under the Lieberman-Warner climate bill, which will be debated in the Senate early next month.

The letter also urges Senate leaders to increase pressure on regulatory bodies such as the Securities and Exchange Commission to issue clear guidance on what climate change risks firms should disclose to investors.

The coalition, which has been organised by ethical investment lobby group Ceres, said there was a strong business case for enacting more stringent carbon targets and legislation.

"Investors hate uncertainty, and that is the problem they face today," said Mindy S Lubber, president of Ceres and director of INCR. "Strong and decisive action from Washington will open the floodgates on large-scale clean technology investments, enabling US investors and businesses to lead instead of lag on climate change solutions."

Oregon state treasurer Randall Edwards, whose office manages $80bn (£40bn) in assets, agreed that far from damaging the economy as its critics claim, the Lieberman-Warner bill would create opportunities for investors. "It is time for Congress to step up to the plate and tackle climate change. Any further delay is inexcusable," he said "The Lieberman-Warner bill would give investors such as myself the ability to see the risks involved so we can begin rebuilding our economy by investing in green technologies."

The calls come in the same week as Democratic Senator Barbara Boxer released an overview of a package of amendments to the Lieberman-Warner bill which are expected to form part of the proposed legislation. The amendments contain a number of measures designed to minimise the financial impact of the planned cap-and-trade scheme, including a mechanism to reduce the price of carbon credits if they hit a certain level and proposals for an $800bn (£400bn) tax relief fund to help consumers cope with rising energy costs.

In related news, the Bay Area Air Quality Management District Board yesterday voted in favour of legislation that would make it the first region in the US to impose a carbon tax on businesses.

Under the legislation, which will take effect from the start of July, 2,500 companies and agencies will pay 4.4 cents for every metric ton of carbon dioxide they emit. While the fee for many businesses will be modest, it is expected that the 10 biggest polluters in the region will have to pay over $820,000 (£410,000) combined.

Speaking to the San Francisco Chronicle, San Mateo County supervisor and air district chairman Jerry Hill said the board was right to pre-empt state and federal carbon legislation. "Someone needs to take a first step, and we are running out of time, when you consider that the bay will have risen three feet by 2100 and the effects of climate change will be devastating," he said. "This is a more expensive proposition if we do nothing."

However, the long-term future of the tax remains in doubt with the legislation expected to face a legal challenge from business groups which argue that the board does not have the authority to impose the levy.