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Investors must 'move beyond talking' on climate risk disclosure – AODP

Institutional investors have been urged to back the “inevitable” shift towards even greater climate-risk transparency to protect investments against climate change risks.

The Asset Owners Disclosure Project (AODP) said it was time for investors to “move beyond the talking” when it came to tackling the risk associated with climate change.

Its chief executive Julian Poulter added that those leading the organisation’s index on climate-risk disclosure had proven investments could be protected “against a carbon crash and still make money”.

“It’s time to focus attention on those laggards who are digging their heels in – some for ideological reasons and some out of negligence,” he said. 

He added that the writing was on the wall regarding transparency, and that leaders in the field were already fully disclosing all risks associated with climate change.

“It’s time to accept the inevitable and embrace this change,” Poulter said.

The warning came as the UK’s Prudential Regulation Authority warned that pension funds should not underestimate their fiduciary duty to consider the financial risks of climate change.

In a report aimed at the insurance industry and launched by Bank of England governor Mark Carney, it outlined lawsuits brought in the US against pension trustees for failing to consider the financial risks associated with the “structural decline” of the coal industry.

In a speech at Lloyd’s of London on Tuesday, Carney referenced the US lawsuits.

“Cases like Arch Coal and Peabody Energy – where it is alleged the directors of corporate pension schemes failed in their fiduciary duties by not considering financial risks driven at least in part by climate change – illustrate the potential for long-tail risks to be significant, uncertain and non-linear.

“These risks will only increase as the science and evidence of climate change hardens.”

The AODP and ClientEarth previously warned that pension funds falling behind on climate-risk mitigation risked breaching their fiduciary duty.

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