GLOBAL - Fourteen pension fund investors and asset owners have signed up to conduct a study with Mercer Consulting to find out what impact climate change will have on the risk and return potential of pension funds.

The giant Norwegian state-owned pension fund and US-based Calpers were the first known names engaging in the project to create a scenario-based framework identifying potential new investment opportunities and future risks for investors in relation to climate change.

The key investor parties so far include AP1, asset manager APG, AustralianSuper, British Columbia Investment Management Corporation (bcIMC), CalPERS and CalSTRS, the Environment Agency Pension Scheme, the Maryland State Retirement and Pension System, the Norwegian Government Pension Fund, the Ontario Municipal Employees Retirement System (OMERS), asset manager PGGM and VicSuper Pty Ltd.

Additional parties included in the study are the Carbon Trust and IFC, a member of the World Bank Group, along with The Grantham Research Institute on Climate Change and the Environment, and Vivid Economics.

More specifically, the study will consider a variety of climate change scenarios and map the potential risks and opportunities of these outcomes for returns on asset classes and in different regions until 2030 and 2050.

The research will also look at volatility and correlations among asset classes, regions, and sectors under each scenario and consider each scenario's impact on strategic asset allocation.

A report will then be published in the fourth quarter of this year while involved parties will receive a tailored report assessing the impact of these scenarios on their own mix.

Findings will then also be used to lobby policymakers and industry bodies on the subject and its impact on investors.

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