As the severity of climate change grows, the urgency for investors to address physical climate risks in their portfolios becomes more acute. Physical climate risks are on the increase as temperatures rise, precipitation patterns change (for example, droughts, flooding), ocean temperatures increase and sea levels rise. These risks have an impact on many of the investments in a pension fund portfolio. How can pension funds mitigate these risks?

The IIGCC has produced guidance for investors which sets out how to integrate the risks and opportunities presented by the physical impacts of climate change into their investment processes. The IIGCC urges pension funds to take these risks into account  to meet their fiduciary duty and they articulate the steps  an investor can take. Unfortunately, climate risks are not being adequately or materially factored into company valuations or long-term company strategies. What can pension funds do about this?

Danielle Boyd of the IIGCC provided an overview of the guidance for investors and the steps pension funds can take to manage these risks. Marion Maloney of the Environment Agency Pension Fund  then shared some of the work their pension fund has undertaken to mitigate physical climate risks across their portfolio.

A Q&A followed, moderated by Karen Shackleton of Pensions for Purpose.

We then moved to breakout rooms of mixed stakeholders, led by our sponsors Invesco and Redington, to discuss the following questions:

1. What are your thoughts about the IIGCC framework for mitigating physical climate risks? Is this something you would consider adopting?
2. How do you assess physical climate risks in your portfolios?
3. What additional information or data would you need to make investment decisions to reduce exposure to physical risk?

In the usual way, we then regrouped and our sponsors shared insights from the breakout room discussions before Danielle Boyd and Marion Maloney wrapped the session up.

Agenda

The agenda for this online interactive discussion was as follows:

• Welcome from Pensions for Purpose and housekeeping.
• Keynote presentation from Danielle Boyd, IIGCC, and Marion Maloney, Head of   Responsible Investment and Governance, Environment Agency Pension Fund.
• Questions.
• Mixed breakout rooms moderated by our forum sponsors, Redington and   Invesco, to discuss key questions.
• Return to main meeting – to share insights.

Who was this event for?

Anyone involved in the governance or management of pension fund assets or other pools of assets, and climate experts. For example, trustees of corporate defined benefit and defined contribution pension plans, LGPS pensions managers and committee members, in-house pension teams, legal, actuarial and investment advisers, asset managers, other investment service providers and climate-research groups.

Speaker biographies

Danielle Boyd, Investor Practices Senior Programme Manager, 
The Institutional Investors’ Group on Climate Change (IIGCC)

Danielle supports the IIGCC's Investor Practices programme working with investors to better integrate climate risks and opportunities into their investment processes and decision-making. Danielle has played a key role in the development of investor-focused tools and frameworks, including the Net Zero Investment Framework and a forthcoming Climate Resilience Investment Framework.

Marion Maloney, Head of Responsible Investment and Governance, 
Environment Agency Pension Fund (EAPF)

Marion joined the EAPF as Policy Governance and Risk Manager in November 2018. Before that she was a contributing members’ representative on the Pensions Committee, alongside her day job as a senior adviser regulating industry. Marion has over 20 years’ experience in public policy at local, national and European level

Paris Alignment Forum

The Paris Alignment Forum was established by Pensions for Purpose to help pension funds and other asset owners on their journey towards alignment with the goals of the Paris Agreement. We do this by sharing climate-related thought leadership written by our Influencer members (asset managers, consultants and lawyers), by running free training workshops for trustees and by engaging in industry-wide conversation through our quarterly all-stakeholder and asset-owner events. To join the Paris Alignment Forum please email Karen Shackleton.

Pensions for Purpose

Pensions for Purpose exists as a bridge between asset managers, pension funds and their professional advisers, to encourage the flow of capital towards impact investment. Our aim is to empower pension funds to seek positive impact opportunities and mitigate negative impact risks.

For more information, please email Charlotte O'Leary.

To the extent that anything on this website constitutes a financial promotion it is exempt from the general prohibition in S21 of FSMA on the basis that the site is only intended for investment professionals as such term is defined in S19 of the Financial Promotions Order. Please note that Pensions for Purpose does not provide consultancy services, advice or personal recommendations on any of the investment opportunities mentioned on the platform. We curate content written by Influencer members and do not endorse any underlying funds.

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