10 July 2024
Quantum Advisory, the leading independent financial services consultancy have released the attached article for Net Zero Week addressing the pivotal role that pension schemes can play in addressing the threat of climate change
Article Summary
Climate change leads to global warming and poses long-term risks on the environment and society. In the spirit of Net Zero Week, the article discusses the pivotal role that pension schemes can play in addressing the threat of climate change. It delves into the responsibilities of pension schemes, questioning firstly whether they have a duty to tackle climate change and also what role they could play in addressing the challenge. The article suggests that pension schemes, as significant allocators of capital, should consider the financial materiality of climate change risks when making investment decisions. The article elaborates on the governance responsibilities of pension scheme trustees, referencing the new requirements introduced in the General Code of Practice. It also explores what exactly trustees can do to mitigate risk at a scheme-level but also what action can be taken to influence real world decarbonisation.
Ultimately, it concludes that while trustees may not have an explicit duty to combat climate change, they must at least consider the potential risks to fulfil their fiduciary duties effectively.
Joe Condy, Chartered MCSI
Investment Consultant
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