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How Climate Change Could Affect Your Pension

Posted: 12/11/2013 12:31 pm

Is your pension fund or insurance company a leader or laggard when it comes to avoiding risky bets on the future impacts of climate change?

A new survey finds that major Canadian institutional investors -- like the Ontario Teacher's Pension Fund, AGF and Manulife Insurance -- are not adequately taking into account the long term financial risks of climate impacts. 

The survey, called the Global Climate Investment Risk, is based on data acquired from 460 funds who were invited to provide data, from members of those funds and using publicly available information. Each fund is rated from AAA to X based on investment mix and recognition of the financial risks that climate change will have now and in the future.

Conducted by the Asset Owners Disclosure Project (AODP), the survey concludes that of the 460 funds, only five received a AAA rating, while 173 funds are rated "X" -- no Canadian funds received a AAA rating, while 19 were considered "X-rated."

The X-rated companies include well-known financial and government institutions like: Royal Bank of Canada, Ontario Public Service Pension Plan, Canada Post Corporation, Quebec Teachers and the Pension Plan of Elected Municipal Officers. 

That last one should be of interest to Mayor of Vancouver, Gregor Robertson, who has been a very outspoken leader on climate change and sustainability issues.

"While we can see some leaders emerging, many haven't acknowledged their dangerous and foolhardy addiction to investments riddled with climate risk, let alone checked themselves into rehab," says Julian Poulter, Executive Director of AODP.
"It's pretty clear through the Index that the big laggard funds continue to be too scared to take on big fossil fuel companies, even though they know there are enormous risks through continuing investing in them."
"A majority of the world's investment industry are clearly acting contrary to the interests of those whose money they represent - this is an outrageous situation. It must be remembered that much of the money being held by these organizations is the product of workers' lifelong savings," Sharan Burrow, AODP board member and General Secretary of the International Trade Union Confederation said.

Here are the 10 best funds that are actively addressing the financial risks of climate change on behalf of their members:

1. Environment Agency Active Pension Fund (UK)

2. Local Government Super (Australian pension fund)

3. CalPERS (US pension fund)

4. Stichting Pensioenfonds Zorg en Welzijn (PFZW/PGGM) (Dutch pension fund)

5. VicSuper (Australian pension fund)

6. AustralianSuper (pension fund)

7. Government Employees Pension Fund (South Africa)

8. Florida Retirement System Pension Plan

9. BT Super for Life (Australia pension fund)

10. Aviva (UK insurance company)

You can find a complete list of all the investment firms on the AODP website here.

So where is your money in this mix?

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