Net Zero Top Tips for Pension Scheme Trustees

“Addressing climate change is in the world’s interest, but increasingly pension funds recognize that it’s in their interest because climate risk is investment risk. The scale of stranded assets is only starting to be appreciated. And not thinking about terminal value in a world on the road to net zero could well prove terminal for some portfolios.” Mark Carney, United Nations Special Envoy for Climate Action and Finance

The underlying investments of pension and other retirement schemes carry extensive, diverse and complex exposure to climate outcomes. Whether related to physical, transition or litigation risks resulting from climate change, these may result in significant business disruption, ‘stranded assets’ and a resultant devaluation of the investment.

Increasingly, the adoption of a net zero strategy is seen as a fundamental part of the response to these risks. It is therefore prudent for trustees to consider a range of responses towards net zero alignment, protecting savers’ money from the potential economic shocks of climate change, and leveraging investment opportunities created by the global transition to a net zero economy.

A4S has produced resources tailored for pension scheme chairs and trustees to help them navigate through the plethora of advice and frameworks around aligning their schemes to a net zero pathway, providing some key takeaways and practical actions enabling trustees to respond.

“Pension scheme trustees have an essential role to play in achieving a global net zero economy. These resources – part of our ESG Toolkit for Pension Chairs and Trustees – help trustees take practical steps towards setting and implementing a net zero investment strategy with examples, tips from fellow trustees, and presented in a way that supports the busy role of a pension trustee.” Jessica Fries, Executive Chairman, A4S