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Pension fund chairs make 5 commitments on climate risk

Ahead of the UN’s October COP26 conference in Glasgow, pension funds commit to align their investment portfolios ‘with a 1.5°C climate change pathway’.

Chairs of 14 pension funds with a collective £267.9 billion ($317 billion) of assets under management have committed to a transition to a carbon net-zero environment, it was announced Wednesday.

Signatories to the A4S Pension Fund Net Zero Statement of Support included chairs of the British Telecom Pension Scheme, HSBC Bank Pension Trust (UK) Limited, Barclays UK Retirement Fund, Tesco PLC Pension Scheme, and the Health Employees Superannuation Trust Australia (HESTA).

The statement was facilitated by Accounting for Sustainability (A4S), set up in 2004 by HRH The Prince of Wales to encourage finance leaders to adopt sustainable business models.

In the statement, the chairs said: “[We] recognise that our ability to uphold our fiduciary duty in providing long-term, risk-adjusted returns to our members is threatened by the impact of climate change both now and in the future.

“Our responsibilities include driving capital towards positive outcomes, being a catalyst for innovation and opportunity, helping to finance the transition to a net-zero global economy, investing in resilience to protect against physical risks and restore nature, and leveraging our influence across the investment chain.”

Specifically, within 12 months of signing the statement, the pension fund chairs are:

  • Committing to set net-zero targets to align their investment portfolios with a 1.5°C pathway.
  • Ensuring their direct service providers support this ambition.
  • Pledging to be active shareholders across all relevant asset classes they invest in.
  • Collaborating with their peers to innovate ways to bring influence to bear in the interest of their members.
  • Attempting to understand climate risk in a holistic manner and to manage these risk factors within their investment portfolios, including physical and transition risks.

A4S has produced an ESG Toolkit for Pension Chairs and Trustees and Net Zero Top Tips for Pension Scheme Trustees.

Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.