Responding to the Government’s carbon commitments and how this will be felt by the pensions and asset management industry
04 Feb 2020
Amy Sutherland, Actuarial consultant at Hymans Robertson comments on the Government’s carbon commitments today and how this will be felt by the pensions and asset management industry
“The Government’s plan to bring forward a ban on selling new petrol, diesel or hybrid cars in the UK to 2035 is likely to create a ripple effect across the pension and asset management community. There has been a well-publicised push on climate risk awareness within pension schemes in the last couple of years, but this is only the start of a very long and crucial journey. Trustees have been required to consider and document their stance on Environment, Social and Governance issues under the wider umbrella of Responsible Investment, but this commitment today and the more stringent measures which we expect to see in coming years will really hold Trustees both responsible and accountable for where scheme assets are invested. Whilst one of the big excuses Trustees currently give for not taking responsible investment seriously is the potential compromise of returns, we will start to see the lack of adaptability to a low-carbon world impact returns far more than stubbornly remaining in less than favourable funds and industries.
“In terms of asset managers themselves, some are seen to be falling behind others in terms of climate awareness and announcements like today’s will start to weed out those whose promises are empty words. With this announcement issued today being only one of eight key policies forecast by the Principles for Responsible Investment (PRI), with others including coal phase-outs, CCS and decarbonisation for industry, and agricultural shifts, there is still a lot of work to do to ensure that available investments are ready for the move to a greener future. We urge Trustees, their advisers and asset managers to all get climate risk on the agenda immediately and consider both the mitigating and preventative actions that they need to be taking now to ensure they are prepared for the global swing we expect to come shortly.”