It was a pleasure to meet with Nico Aspinall at last week’s Transparency Taskforce event (for which I thank Andy Agathangelou). Nico spoke eloquently on the subject of climate change and pensions – a subject I believe has been overlooked for too long.
It was therefore with delight that I heard that The Institute and Faculty of Actuaries had recently published a ‘risk alert’ to all members calling on them to consider climate related risk.
Their press release starts as follows:
IFoA warns on climate change financial risks
The Institute and Faculty of Actuaries (IFoA) has today (12 May) issued a Risk Alert to raise awareness around the financial risks posed by climate change. We are asking all actuaries, whichever field they are working in, to consider how the implications of climate change affect their work, actions and decision making.
The IFoA alert is intended to draw attention to specific areas of actuarial activity, asking members to think carefully about the consequences of actions they are taking. There is an increasing body of evidence demonstrating that climate change represents a material risk to future economic stability.
Read more here…
This alert is welcome as it marks a further turning point in the ‘should they/ shouldn’t they’ debate around climate change and investment – finishing firmly on the ‘yes, they should’ side.
In essence this appears to indicate that any actuary (pensions specialist or otherwise) who fails to consider climate risks would be falling short of the guidance issued by their professional body.
In addition to this information additional guidance was issued to pensions actuaries in the form of a report (see below), to raise awareness of the risks relating to ‘resources and the environment’.
This new ‘risk alert’ and report follow on from the global Task Force on Climate-related Financial Disclosures (TCFD) draft guidance for companies and financial institutions on how to report climate related financial information.
Finding pensions and investment options to match climate related aims:
For those working in the retail investment area our fund database tool Fund EcoMarket offers numerous different ways to bring climate change into investment planning.
This includes:
- using the ‘SRI Styles’ filter to find funds that specialise in Sustainability or Environmental themes,
- using the ‘SRI Policy’ filter options to find funds that ‘excludes coal, oil and gas’, ‘invest in clean energy companies’, ‘has climate change policy’, ‘reduces risk to carbon intensive industry’
- finding fund managers who are working to effect change by engaging with companies through Responsible Ownership strategies,
- finding fund managers who integrate ESG factors into their across the board risk management strategies
- Use the SRI Features filter, for example, to find smaller, ’boutique’ fund managers who specialise in this area
These options are examples of the many different ways fund managers respond to climate risk – and the opportunities this area can present. They are also representative of the often nuanced and highly diverse needs of different individual investors.
(Note – the filters listed above are linked to primary fund entries that are normally OEICs or SICAVs. These can however be ‘read across’ to life and pension subfunds where the names are identical.)
