Among Large Investors, Pensions Lead Way on Addressing Climate Risk

Whether through engagement, risk management or low-carbon investments, the largest pension funds in the world are leading the way on addressing climate risks, according to a new report from the Asset Owners Disclosure Project (AODP).

The same can’t be said for many of the world’s largest investors. In fact, AODP found that nearly half of the world’s 500 largest investors aren’t doing anything to address those risks.

AODP graded the world’s largest investors on the actions they’ve taken to mitigate the risk of climate change to their investment portfolios. The 10 highest-graded entities were all pension funds (see above chart).

More info on the laggards, from ai-cio.com:

Of the funds that scored the lowest on AODP’s index, the largest were predominately sovereign wealth funds from oil-producing nations and Asian insurers, including the Abu Dhabi Investment Authority, which manages approximately $773 billion, and Japan Post Insurance, worth $602 billion.

“I would encourage all of them to pick up the pace and ramp up their ambition in respect to a low carbon transition,” said Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change. “It is the key to reducing risk and securing the health of their portfolios now and over the long term.”

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AODP’s annual Global Climate 500 Index, which tracks the 500 largest funds in the world, found that 246 investors managing $14.3 trillion are doing nothing to address the investment risks related to climate change.

Read the full report here.