Climate change risk much be approached as any other significant risk, and small- and medium-sized pension funds should also rely more on their advisers to help address the issue, speakers said Thursday at the Pensions and Lifetime Savings Association’s investment conference in Edinburgh.
“Treat climate change risk as you would any other significant risk. Climate change risk is not going to go away soon … I urge you (to) work out what your scheme’s response is going to be,” said David Adkins, chief investment officer of the £7 billion ($10 billion) The Pensions Trust, Leeds, England, speaking at a panel discussion.
Mr. Adkins said personal views on climate change — including whether it is even happening — “are of secondary importance. What matters is a collective view around climate change risk will influence policy and development of alternative energy resources.”
Speaking on the same panel, Donald MacDonald, chair of the Institutional Investors Group on Climate Change, said there is a need to engage with all participants of the investment community, and above all with investment advisers and the actuarial services industry. There is also “a need to embrace those issues and ensure” the right information and analysis is provided to asset owners.
“There is no hiding place nowadays,” he said. Large asset owners “have the capacity to deal with those issues,” but the smaller and medium-sized asset owners “really need to expect more from their advisers.”
On the topic of existing investment in fossil fuels and other climate change-sensitive assets, Christiana Figueres, executive secretary at the United Nations Framework Convention on Climate Change, said that investors in “high-cost, high-carbon investments should get out of that very quick. You cannot continue to dig up more fossil fuels.” She said the cost associated with deep drilling and tar sands “just cannot come into the portfolios. It is absolutely a waste of money, truly a breach of fiduciary duty,” said Ms. Figueres.