Pension funds search for climate change risks and opportunities

by Ian Fraser, for QFinance, March 16, 2010.

Pension funds are increasingly being asked by politicians, non-governmental organizations, campaigners, and pressure groups to mobilize their financial clout more actively and to take their responsibilities as corporate owners more seriously. The chances are it could change from being “asked” to being “required.”

At the vanguard of the movement is UK  Treasury minister Lord Myners who recently berated pension funds for their appalling voting records and accused them of behaving like old-style “absentee landlords.” Their short-termism, passivity, and habit of voting with managements even on self-destructive deals such as RBS’s purchase of ABN AMRO, is seen as having exacerbated, and perhaps even triggered, the banking and financial crisis.

Myners wants to pressure pension funds and other institutional investors to raise their game and emulate the behavior of the $460bn Norwegian Government Pension Fund and California’s public sector scheme Calpers by engaging more actively with management teams to ensure they behave responsibly, ethically, and sustainably.

Earlier this week Mercer Consulting, the Carbon Trust, and the IFC, a subsidiary of the World Bank, launched a project that is expected to make it easier for pension funds to oblige—especially where climate change is concerned.

The research project should ensure investors are not flying blind where climate change is concerned. It aims to identify the investment opportunities, as well as the investment risks, that global warming can be expected to pose. The study will examine a range of global warming scenarios and map out the risks and opportunities each will have on a range of asset classes and geographies until 2050…(continue reading)


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