To whom it may concern,
In the last year, the Governor of the Bank of England (1), HSBC (2), Mercers (3) and the World Bank (4) have made it clear that climate change is a major and growing financial issue. Mark Carney has said that climate change poses physical, liability and transition risks, which are all increasing.
Therefore, it is in the best interests of the SLGPS to have regard to the financial risks posed by climate change, and take appropriate steps to manage these risks.
We are writing to the Chair of the Pension Committee, or other appropriate Council official, to set out the response of your fund to five questions:
1. What steps is the fund taking to address the financial risks posed by climate change? Is there a formal process for regularly assessing and reducing exposure to these risks? In particular, can you provide details of:
a. When the Board or Pensions Committee has explicitly discussed carbon bubble risk and the financial implications of growing defaults and credit risk for fossil fuel companies; and
b. What action or strategy the fund has agreed upon, to manage and reduce carbon bubble risk/exposure to fund members?
2. The December 2015 Paris Agreement on climate change saw Governments agreeing to keep global warming to well below 2 degrees, which will require the overwhelming majority of the world’s proven fossil fuel reserves to remain unburned, which would lead to substantial stranding of fossil fuel assets held by corporations in which your fund may currently be investing. On April 22nd 2016, the Paris treaty was signed by 175 countries. Since December 2015 how has your pension fund changed its approach to climate change risks, given the Paris Agreement’s significant ratcheting up in the global response to climate change risks?
3. Have you surveyed or formally consulted with your individual members or employers for their views on your ESG policies or practices in the last 10 years?
4. How much does the fund spend on ESG engagement services and can you give any examples of engagement activities relating to climate change/carbon risk from the last 10 years?
5. Have you signed up to the UN Principles for Responsible investment?
We are asking these questions of all UK local authority pension funds, as part of a survey to assess whether pension funds’ fiduciary duties are being met in regard to climate change financial risks. If you would be able to respond to these questions by the end of July 2016 we would be extremely grateful. Please accept this letter as a request for information under the Environmental Information Regulations 2004, alternatively the Freedom of Information Act 2000.
Please do contact me if you would require further information.
Friends of the Earth Scotland
5 Rose St, Edinburgh EH2 2PR
0131 243 2718
Friends of the Earth Scotland is an independent registered Scottish charity (SC003442).
1 Mark Carney Bank of England, 2015. Breaking the tragedy of the horizon - climate change and financial stability. www.bankofengland.co.uk/publications/Pag... . 29 September
2 HSBC, April 16 2015. Stranded Assets: what next? http://www.businessgreen.com/digital_ass...
3 Mercers, 2015. Investing in a time of climate change. http://www.mercer.com/our-thinking/inves...
4 World Bank, 2015. Major Financial Institutions Move to Integrate Climate Change
http://www.worldbank.org/en/news/press-r... December 7th
Your request dated 23/06/2016 has been submitted to the Freedom Of Information Database.
Please quote Reference No.: 20160623003 for future correspondence.
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