The financial risk of investing in fossil fuels was reinforced late last week as more mega pension funds joined the UN-sponsored Portfolio Decarbonization Coalition (PDC). Gathering in Paris to mark Climate Finance Day, some of the world’s largest investors considered how the financial sector’s decisions are intertwined with climate change. The newest PDC members – including UK’s Environment Agency Pension Fund, the Australian Local Government Super and the pension fund of the French civil service – manage billions of dollars and have committed to de-carbonizing their portfolios.
While a minnow compared to these financial whales, TAF joined the ranks of the PDC in April, re-enforcing our commitment to investing TAF’s $25 million endowment in a climate-friendly manner. Many Canadians are looking for ways to follow suit, addressing their deep concerns about climate change and shielding themselves from the financial risk posed by carbon-heavy investments.
Do you realize your investments – pensions and/or private wealth – may be contributing to climate change? And do you realize that climate change may be putting your retirement income at risk?
The vast majority of known fossil fuel reserves must stay in the ground if we hope to limit the Earth’s temperature increase to below 2°C – the threshold that scientists say is crucial for maintaining a stable climate and a livable planet. The risk of this “un-burnable carbon” to investment portfolios around the world has been highlighted by a range of analysis and opinion-leaders including the Governor of the Bank of England and the President of the World Bank.
Canadian pension funds and asset managers are considered world-class investors. But they are silent and underperforming when it comes to addressing the risk climate change poses to your nest egg. That’s why people need to speak up regarding their concerns about their pension funds, framing their concerns in the language of risk and fiduciary responsibility that is familiar and relevant to the financial sector.
Inspired by Greenlight in the UK, TAF is working with colleagues in the impact investing and climate action space to launch a new initiative, as yet un-named. The focus is on helping Canadian savers call on their pension funds to address and mitigate climate risk, build resilient portfolios, and take advantage of the growth opportunities of a low-carbon economy. Contact me at jlanger@taf.ca if you’d like to get involved.
