Stockholm (NordSIP) – A new report by the Asset Owners Disclosure Project (AODP), which is a part of ShareAction, an investor pressure group, has determined that the majority of the world’s largest public pension funds are coming up short in providing information as to how climate change is affecting the value of their assets.
For the report, “Pension funds in a changing climate”, the world’s 100 largest pension funds with combined assets of $11 trillion were analysed according to recommendations made by the Task Force on Climate Related Disclosures, with findings suggesting that less than 1 per cent of fund assets were invested in low-carbon solutions, only 10 per cent had policies to exclude coal from their portfolios and a full 63% were at risk of “breaching their [climate] fiduciary duty to savers.”
A bright spot in the report’s otherwise critical findings was that European pension funds generally scored better than their peers. One pension fund singled out was Sweden’s AP4, which has moved to ensure its portfolio reflects a more low-carbon economy. “As large investors, pension funds own substantial parts of the global economy and have a stake in maintaining its long-term health and stability,” said AP4 Chief Executive Niklas Ekvall. AP4 topped the ranking, receiving an AAA rating.
France’s Fonds de Reserve Pour Les Retraites (FRR) also received an AAA rating. At the bottom of the ranking were U.K. pension funds, with none receiving a rating above CCC. Denmark’s Sampension also received a “D” rating. Pension funds failing to provide information on climate change risk could be exposed to litigation, the report suggested.