AODP to help pension funds with climate change best practice
GLOBAL - The Asset Owners Disclosure Project (AODP), a not-for-profit organisation dedicated to directing institutional capital toward the low carbon economy, has launched an action plan to help pension funds better manage climate change risk.
The Climate Change Best Practice Methodology will sit alongside the disclosure project, which has requested information from funds on how they manage climate risk.
Its key features are the integration of climate change risks and opportunities into investment strategies and restructuring the processes within the investment chain to better account for systemic long-term risks.
It also addresses the implementation of systems to check that the processes in place are sufficient to manage climate change risks and opportunities on an ongoing basis.
Julian Poulter, AODP's executive director, said: "Mostly, asset owners are in the very early stages of understanding systemic long-term risks such as climate change.
"Our methodology sets out a plan for action along with detailed processes to address key issues. It is designed to assist asset owners in building capability to the world's best practice that will increase members' long-term returns."
He added: "Climate change is a unique challenge for funds, and the big question for funds is how best to manage it. Funds that rely totally on their managers to manage this risk have an even bigger challenge, but there are many funds realising that other portfolio-level actions are possible."
The Methodology is available for free from AODP's website.
Meanwhile, in the UK, consultancy Punter Southall has produced a guide for trustees on scheme governance, as well as an introduction to pensions for transaction professionals and corporate sponsors, both of which are available online.
Its 'Pension Scheme Governance - a guide for trustees' offers practical help for trustees who face a growing range of legal obligations and regulatory guidance.
It covers areas such as the employer covenant, governance of the scheme's assets, trustee knowledge and understanding, and the importance of good recordkeeping.