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Major pension funds call for G20 regulation on climate disclosure

National regulation requiring disclosure of material climate risks should be a priority for the G20, according to major European and US pension funds and other institutional investors with more than $13trn (€11.5trn) in assets under management. 

The recommendation is one of several that the group of investors, which include the $293bn California Public Employees’ Retirement System (CalPERS) and major European asset owners such as the Swedish buffer funds, €183bn Dutch asset manager PGGM and the UK’s £50bn (€68bn) Universities Superannuation Scheme (USS), have set out in a climate change-focused letter to the governments of the world’s 20 largest economies (G20).

Citing the landmark agreement reached at the UN climate change conference (COP21) in Paris in December 2015, the investors said that significant investment is needed to achieve the goals of the Paris agreement and that governments “have a responsibility to work with the private sector” to ensure this is catalysed.

To that end, according to the investor group, the G20 should, among other steps, “prioritise rulemaking by national financial regulators to require disclosure of material climate risks”.

They cited the work being done by the Task Force on Climate-related Financial Disclosure (TCFD) of the Financial Stability Board (FSB), and asked the G20 to consider the task force’s recommendations, due in December 2016, “as inputs towards any rulemaking” by national financial regulators.

The TCFD is developing a framework for voluntary climate-related financial disclosure by companies, and is due to present a final report for consultation by the end of December.

In their letter, the investors also called for the G20 to “support a doubling of global investment in clean energy by 2020”, saying the private sector needs policy support to achieve this goal, and for the governments to implement previously issued investor recommendations for action such as the introduction of “stable, reliable and economically meaningful carbon pricing” and the phasing out of subsidies for fossil fuels.

The letter, which was co-sponsored by investor organisations such as the UN-backed Principles for Responsible Investment (PRI) and the Institutional Investor Network on Climate Change (IIGCC), comes in the lead-up to a summit of G20 leaders in Hangzhou, China, in early September.

The investors also want to see “green finance” on the agenda of the summit, specifically conclusions drawn by the G20’s green finance study group.

“We request that the green finance agenda be taken forward by future G20 presidencies,” the letter states.

It comes after the UK’s Institute and Faculty of Actuaries (IFoA) earlier this week announced it has signed a letter to the G20, urging the governments to phase out fossil fuel subsidies.

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