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Investing in the future—what role do pension funds play in mitigating climate change?

Investing in the future—what role do pension funds play in mitigating climate change?
Published on: 29 July 2019
Published by: LexisPSL
  • Investing in the future—what role do pension funds play in mitigating climate change?
  • Original news
  • With the increasing relevance of environmental, social and governance (ESG) factors in investing more generally over the past couple of years, what would you say is the role of UK pension funds—as opposed to say large asset managers—in helping tackle climate change?
  • What are the main tactics pension funds can use to incentivise the companies in which they invest to address the threat posed by climate change? How effective are these tactics?
  • Are there other tactics that you would like pension funds to push more strongly? Are there any legal routes that pensions funds can take in order to hold companies to account for failing to address the issue of climate change?
  • Is it significant that the government rejected the proposal to introduce mandatory climate risk reporting in pensions in the Environmental Audit Committee report: Greening Finance: Embedding sustainability in financial decision making?
  • Do you think recent developments such as the publication by the Financial Conduct Authority of consultation paper 19/15: Independent Governance Committees: extension of remit (CP19/15) and the announcement from the Minister for Pensions and Financial Inclusion of a new working group to guide pension schemes in climate risk assessment will have an impact on progress in this area?
  • Some have argued that by attempting to address ESG issues—including climate change—pension funds have strayed from their fiduciary duty, which is to provide the best returns for their investors. Where do you stand on this argument?
  • Are there any other ESG factors that pension funds could encourage in order to help companies address climate change?

Article summary

Pensions analysis: Over the past few years, climate change—as a threat to business sustainability—has become one of the main concerns of the investment community. Caroline Escott, policy lead of investment and stewardship at the Pensions and Lifetime Savings Association (PLSA), discusses the threat posed by climate change exclusively in relation to pensions funds. or take a trial to read the full analysis.

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