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ABP, AP4 rise up ranking of asset owners assessing climate risk

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Only 7% of the world’s largest asset owners are able to calculate their carbon footprint, according to a global ranking of pension and sovereign wealth funds.

However, the latest Global Climate 500 ranking conducted by the Asset Owners Disclosure Project (AODP) awarded a number of Europe’s largest pension funds the highest rating of AAA, with AP4 and PFZW among the schemes that saw their ratings improve.

Australia’s Local Government Super rose to the top of the ranking of 500 asset owners, while the UK’s Environment Agency Pension Fund fell four places to fifth after a number of new entrants rose 54 spots to enter the Top 10.

Norway’s KLP was the highest-ranked European pension provider, coming second, with CalPERS third and Dutch civil service pension scheme ABP fourth, up 28 spots in the ranking.

Dutch healthcare scheme PFZW and Sweden’s AP4 were also among the European pension investors to claim one of the nine highest ratings, with the buffer fund rising 54 places to rank ninth.

The ranking also saw Norway’s Government Pension Fund Global top the list as the most climate-conscious of the 39 sovereign wealth funds assessed, falling just below the Top 20 and receiving an A rating.

Leading 20 institutions in Global Climate 500
Leading 20 institutions in Global Climate 500 
RankInstitutional investorCountry
1Local Government SuperAustralia
2KLPNorway
3CalPERSUS
4ABPThe Netherlands
5Environment Agency Pension FundUK
6New York State Common Retirement FundUS
7AustralianSuperAustralia
8PFZWThe Netherlands
9AP4Sweden
10General Board of Pension and Health Benefits of the United Methodist ChurchUS
11AP2Sweden
12AvivaUK
13First State SuperAustralia
14CalSTRSUS
15VicSuperAustralia
16Universities Superannuation SchemeUK
17CareSuperAustralia
18PKADenmark
19New York City Employees Retirement SystemUS
20Teachers’ Retirement System of the City of New YorkUS

Julian Poulter, chief executive at the AODP, said it was encouraging Scandinavian investors had embraced the concept of assessing carbon risk.

“However, the Norwegian sovereign wealth fund is still the elephant in the room with its huge size, and Norwegians need their fund to get to AAA rating in advance of Statoil’s eventual and inevitable demise,” he said.

Poulter also praised efforts by Dutch pension managers and funds but noted that the country was almost uniquely exposed to climate change risks.

He also pointed out that 35 UK schemes were awarded the worst or second-worst possible rating, stressing that members of the “laggard” funds were likely to take action.

The AODP last week announced it would work with NGO ClientEarth to help pension beneficiaries sue schemes failing to acknowledge the risk of climate change.

BP and Shell are a significant source of dividends for UK pension funds,” Poulter said.

“It simply isn’t good enough to sit back and expect markets to manage their demise smoothly when history shows the market correction is likely to be sudden and brutal.”

Pension investors recently saw a resolution backed by a number of Europe’s largest funds accepted by BP’s shareholders, requiring the company to publish how it would deal with climate change. 

A similar resolution has been tabled for the Shell AGM next month. 

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