As expectations build for the pivotal United Nations climate-change conference this fall, many asset owners, managers and regulators are not waiting to take action.
The goal of what is known as the COP26 summit beginning Oct. 31 in Glasgow, Scotland, is to accelerate action toward the goals of the Paris Agreement and the U.N.'s climate-change framework.
Before then, many pension fund officials and regulators are taking matters into their own hands, stepping up commitments to net-zero emission goals and to enhanced disclosure recommended by the Task Force on Climate-related Financial Disclosures.
One ambitious move came July 14 when the European Commission unveiled a sweeping package of legislative proposals to reduce net greenhouse gas emissions by at least 55% by 2030. The "Fit for 55" package is part of the European Green Deal aimed at making it the first climate-neutral continent by 2050. The ambitious plan calls for new policies on climate, energy, land use, transportation and taxation to achieve 55% lower emissions than 1990 levels.
For pension fund officials, it's about upholding their fiduciary duty to provide long-term, risk-adjusted returns to their members.
That was the motivation for pension fund chairmen overseeing a collective £267.9 billion ($372.2 billion) in pension assets in the U.K. and Australia on July 14 to commit to net-zero emissions targets and to align their investment portfolios with a path toward a temperature increase of 1.5 degrees Celsius, among other actions. The 14 signatories to the A4S Pension Fund Chair Net Zero Statement of Support pledge coordinated by the Accounting for Sustainability Project at the Prince of Wales's Charitable Foundation include the chairs of HSBC Bank Pension Trust U.K. Ltd., Barclays U.K. Retirement Fund, Unilever U.K. Pension Fund, Tesco PLC Pension Scheme, BT Pension Scheme, National Employment Savings Trust, Scottish Widows Master Trust and Health Employees Superannuation Trust Australia.
The chairmen recognize what is at stake for pension funds, and what they can do, said Jessica Fries, executive chairwoman of the Accounting for Sustainability Project, in a statement. "Pension schemes are highly exposed to the risks of an unsustainable future, but also powerfully positioned to influence a sustainable outcome," Ms. Fries said.