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London pension authority eyes climate change

UK – Knowing the consequences of climate change is becoming a “respectable” long-term investment issue among investors, according to the chief executive of the London Pensions Fund Authority.

Peter Scales told IPE that investors are beginning to see climate change not only as an environmental problem but also as an investment issue. “It is just like SRI change from being a campaigning ethical investment issue to becoming sensible responsible investment,” Scales said.

The issue was “coming out in the UK and it is beginning to come out in Europe”. It was becoming “a more respectable issue,” he told IPE at the European Pensions Summit.

“People talk about it for all sorts of political reasons but it does not come up in investment decisions,” he observed.

“The issue about climate change is that there are big risks which we do not really understand. But we know there is a cost oncoming and that is going to hit the bottom line in various ways either in the costs of the products they companies use or in the value of what they sell,” he added.

He said the impact of climate change on the long-tem investment horizon should also be managed.

The £3bn (€4.33bn) LPFA is a member of the Institutional Investors Group on Climate Change.

The forum involves pension funds and other institutional investors on issues related to climate change. Members include the BBC Pension Trust, Greater Manchester Pension Fund and asset managers like Henderson Global Investors and BNP Paribas Asset Management.

“Through the IIGCC we can put together a public perception of these things to our policy makers, so that we can talk to the government about these issues and when they talk about emissions they can think about the impact they emissions have on the value of investments and not just the value of it as a climate change issue.”

Scales stressed, however, that the IIGCC, is not interested in campaigning, but rather in “raising the profile” of the financial implications of climate change.

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