New report urges pension trustees to address climate risk

The Carbon Trust and the Institutional Investors Group on Climate Change have released a guide written by Mercer Investment Consulting entitled "A Climate for Change: A trustee's guide to understanding and addressing climate risk". This guide states that it is consistent with fiduciary responsibility for trustees to address the financial risk posed by climate change in managing risk and maximising return across plan investments.

Climate change has become an important global, economic, social and political issue.  It is also one of the most financially significant environmental issues facing investors today.  While other environmental risks can be highly relevant to specific sectors, climate risk distinguishes itself through its widespread potential for impact on individual companies, across sectors and whole economies.

The impact of climate change will be felt directly (in terms of damage to agriculture, forestry, real estate and water), and will also have serious consequences for the sectors impacted by policy-driven strategies to mitigate climate change (such as energy, electric utilities, and autos).

The guide provides pension trustees with:

• Relevant, high-level information on the potential for climate change to impact financial risk and returns;

• An exploration of the roles and responsibilities of fiduciaries in light of this; and

• Information about the steps that can be taken to address climate risk.

This guide has been released alongside training materials designed to assist professional pension trainers in providing training on climate change related issues. The guide can be downloaded from the link in the lefthand column. The training materials can be downloaded from the Carbon Trust website.

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Mercer is a leading global provider of investment consulting services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and we work with the fiduciaries of pension funds, foundations, endowments and other investors in some 35 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure and implementation to ongoing portfolio management. We create value through our commitment to thought leadership; world-class, independent research; and top-notch consultants with local expertise.