Pension Fund Managers Get It

Climate Change and the Fiduciary Duties of Pension Fund Trustees in Canada    was written by the Toronto law firm Koskie Minsky LLP for SHARE (Shareholder Association for Research and Education)  . Released on September 8, it examines the legal responsibilities of pension trustees, with an emphasis on British Columbia, and considers the interface with public policy and governments . Concurrently, SHARE and NEI Investments issued a public letter to the Premier of Alberta, stating “We encourage the Government of Alberta to keep carbon pricing as a central tenet of future carbon policy.” It also urges the government to diversity the economy and to invest in renewable energy and energy efficiency initiatives. The letter was signed by institutional investors and related bodies representing over $4.6trillion in assets under management, most notably the British Columbia Investment Management Corporation, the B.C. Teachers Federation, California State Teachers’ Retirement System, the Pension Plan for the Employees of the Ontario Public Service Employees Union, Pension Plan for the Employees of the Public Service Alliance of Canada, and investment and financial officials from churches around the world and across denominations.

Pension fund managers have lots to think about, as business-oriented reports continue to warn about the financial risks of climate change and stranded assets. The Koskie Minsky paper acknowledges the influence of the analysis of Mercer Investment Consulting , Investing in a time of Climate Change (2015), and an earlier 2011 Mercer report. Publications over Summer 2015 include: Carbon Asset Risk Discussion Framework   (published by World Resources Institute and the UNEP Finance, partly funded by the Bank of America Foundation, Citigroup, JPMorgan Chase Bank N.A., and Wells Fargo Foundation); The Cost of Inaction: Recognising the value at risk from climate change ( from the Economist Intelligence Unit); and Energy Darwinism II: Why a Low Carbon Future Doesn’t Have to Cost the Earth , (from  a division of Citi Bank).

A recent report by Trillium Asset Management found that California’s public pension funds, CalPERS and CalSTRS, had incurred a massive loss of more than $5 billion last year from their holdings in the top 200 fossil fuel companies. Legislation passed the California Assembly on September 2  to force CalPERS and CalSTRS to divest their holdings in coal; Governor Brown has until October to sign the Bill.

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