Climate change poses a major risk to people’s pensions, MPs warn
Government admits there is "a lack of attention and outright misunderstanding remain widespread"
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Your support makes all the difference.Climate change poses a major risk to people’s pensions, MPs have warned.
The Government has admitted that “a lack of attention and outright misunderstanding remain widespread” among fund trustees of their duty to take environmental risks into account.
Climate risks posed to investments include increasing numbers of claims made to insurance firms related to extreme weather, fossil fuel companies losing value and energy businesses “being left behind” by the shift to a low carbon world.
The UK’s biggest pension funds are now being asked how they are protecting people’s savings from the risks of climate change.
The chairwoman of the parliamentary Environmental Audit Committee (EAC), Mary Creagh, has written to the top 25 pension funds in the UK to ask how they manage the risks that global warming poses to pension savings.
“The climate change risks of tomorrow should be considered by pension funds today. A young person auto-enrolled on a pension today may be 45 years away from retirement,” Ms Creagh said.
“Over that timescale these climate change risks will inevitably grow.
“We are examining whether pension funds are starting to take these risks into account in their financial decision making,” she added.
Asset owners, such as pension funds have a fiduciary duty to act in the best interests of their beneficiaries.
But the EAC said it had heard evidence during its inquiry into green finance that the duty is sometimes misinterpreted as a duty to maximise short-term returns, leading to the neglect of longer-term issues such as climate change.
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