ICPM releases guide to integrating climate change considerations in investment processes climate change for asset owners:
Santiago, Chile, October 23, 2018 – The ICPM climate change working group has released Climate change for asset owners: The ICPM guide to integrating climate change considerations in investment processes. The guide is available to download at ICPMNetwork.com.
Climate change is one of the most significant risks facing humanity. It does, and will continue to, affect the investments of pension funds and other asset owners.
Many funds have been addressing climate change for several years as Socially Responsible Investment (SRI), Responsible Investment (RI), or Environmental, Social, and Governance (ESG) issues. Over the past few years, however, climate change has moved from being considered a niche issue to one of potentially major financial consequence for all investors.
“The ICPM climate change guide is unique from others of its kind because it was written by asset owners for asset owners,” said Deborah Ng, Director, Strategy and Risk at Ontario Teachers’ Pension Plan and one of the contributors to the guide. “The goal of the ICPM climate change guide is to share experiences for large asset owners with internal resources and internal management, as well as for smaller funds with predominantly external asset management and consultants.”
The conversation has shifted from a company’s impact on climate change to include the impact of climate change on companies, investment portfolios, and capital markets. “Investors need to understand the potential financial impacts this complex issue brings,” said Ms. Ng. “Climate change goes beyond the environmental dimension and has influence on social, economic, and policy factors.”
Both the transition risks (policy, technology, and behavioral changes) and physical impacts of climate change pose risks and opportunities to the investments that may impact the ability to earn the returns required to provide beneficiaries - whether in DB or in DC - with the retirement income they depend on.
Jaap van Dam, Principal Director Investment Strategy at PGGM said, “For asset owners who have not already done so, it is time to start thinking about policies on climate change, how to integrate the associated risks and opportunities into the investment process, and what initial actions to take.”
The aim of the ICPM climate change guide is to highlight practical steps to help pension funds frame their activities on climate change and offer insights from peers. It is not intended to be prescriptive, but rather offer suggestions and options for asset owners to develop their own tailored approaches. The ICPM climate change guide shares ideas, case studies and experiences.
The International Centre for Pension Management (ICPM) is a global network of pension organizations that stimulates leading-edge thinking and practice about pension design and management. ICPM brings together an influential community of pension industry professionals to share knowledge and interact with academics pursuing pension-related research. ICPM organizes interactive Discussion Forums involving practitioners and researchers and provides funding for objective and transformative research to support effective management and innovation in pension organizations. ICPM also offers pension governance education programs for board members of pension plans from around the globe.
Franco Cignelli, Communications Associate
International Centre for Pension Management