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ESG roundup: UK pension fund body warns members on climate risk

The UK’s pension fund association has warned its members that climate change poses severe risks to their investments.

In partnership with environmental law charity ClientEarth, the Pensions and Lifetime Savings Association (PLSA) has produced guidance for pension funds to act on climate change.

It recommended that funds carry out a programme of measures to mitigate risks and take advantage of opportunities relating to climate change, including incorporating climate change expertise into trustee boards and other governance bodies and instructing asset managers to engage with investee companies with regard to their plans to mitigate and adapt to climate change.

Luke Hildyard, PLSA policy lead for stewardship and corporate governance, said: “Climate change is not just an ethical issue for pension fund governance bodies, but a major threat to financial stability highlighted by numerous credible economic commentators and rigorous research.

“It is therefore imperative that boards and committees consider the potential impact that climate change will have on their investment portfolios.” 

ClientEarth has been engaged in a multi-pronged campaign on climate change. It has put pressures on companies, the UK audit and reporting watchdog, and pension funds themselves.

Earlier this year it supported a campaign calling on trustees to engage with asset managers about voting against the remuneration policies of oil and gas companies, outlining potential liability if they did not take action.

Responsible investment NGO Preventable Surprises this week called for more forceful stewardship from shareholders of utility companies as the largest source of greenhouse gas emissions in the US. They were key to reducing emmissions in line with the Paris Agreement, it said. The think tank called out Blackrock and Vanguard for their voting activity at nine US utilities targeted by shareholders for increased climate risk disclosure.

Southern European shareholders co-ordinate

A new network for shareholder engagement has been launched today in Milan by a group of mainly southern European institutional investors.

Austria’s fair-finance Vorsorgekasse, shortlisted for an IPE 2017 country award, is one of the founding members of Shareholders for Change (SFC).

The other six founding members are Bank für Kirche und Caritas (Germany); Ecofi Investissements, Groupe Crédit Coopératif (France); Etica Sgr, Gruppo Banca Etica (Italy); Fondazione Finanza Etica (FFE, Italy); Fundacion Fiare (Spain), and Meeschaert Asset Management (France).

Together they have more than €22bn of assets under management.

The network’s goal is to organise joint participation in European AGMs, co-sign letters to companies, submit resolutions, organise meetings with corporations and discuss new engagement activities, according to Andrea Baranes, president of Fondazione Finanza Etica, which coordinated the launch of SFC.

UK government to keep up impact, green investing momentum 

The UK government has confirmed its support for developing social impact investing and green finance in the UK.

It set out its intentions in a report on its updated long-term strategy for the UK asset management industry, which was released today. It said it would respond later this month to a Law Commission report on social and impact investments.

In June the Law Commission said it found no legal or regulatory barriers to pension schemes making social and impact investments provided they were in the best interests of scheme members.  

Related images

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  • Shareholders for Change network members

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