Updates to risk register, ISS, investment consultant & A.M mandates since publication of critical reports on climate scenario analysis?
Dear Shetland Islands Council,
Since publication of 'The Emperors New Climate Scenarios' by the Institute and Faculty of Actuaries (IFoA) in July 2023, there have been a *series of critical reports (refer to partial list below) warning of the failures of climate modelling/ climate scenario analysis widely used by investment consultants, central banks and the NGFS.
These reports demonstrate that both the market price of bonds & securities, and future expectations of damages - do not reflect growing physical climate risks - including the failure to assess climate tipping points. I am interested to understand what corrective action the fund, its external consultants & asset managers have taken to assess & manage mounting physical climate risks in the period since publication(s)?
Please confirm/ explain - for the 2023/24 and 2024/25 financial years only - providing copies of source/reference documents where available:
1. If/how you've updated internal risk registers to reflect physical climate risks not being adequately priced/forecast? due to the exclusion of tipping points and other known limitations?
2. If/ how investment consultants you engage with have updated their models to include climate tipping points following expert and member criticisms since 2023?
3. Have you updated investment strategy statements & other related investment policy documents to reflect growing physical climate risks?
4. Have you discussed climate risk modelling flaws/limitations at the pension fund committee since the 2023/24 report publications? and if so have you changed your approach to correct for them?
5. Have you reviewed/ updated investment consultant procurement briefs/ mandates to include tipping points & reflect/ help manage mounting physical climate risks since July 2023?
6. Have you reviewed/ updated AM mandates to reflect/ help manage mounting physical climate risks since July 2023?
7. In your experience, have Asset Managers meaningfully changed where and how they invest on your members behalf - based on investment consultants climate scenario analysis modelling outputs? If so how? - providing relevant examples.
Yours faithfully,
Joel M Benjamin
*The above refers in particular to the following reports on climate scenario analysis by:
_ IFoA - 'Emperors New Climate Scenarios' - July 2023
- Carbon Tracker - 'Loading the Dice Against Pension Funds' - July 2023
- Finance Watch - 'Finance in a Hothouse World' - October 2023
- IFoA - Climate Scorpion - The Sting is In the Tail - March 2024
Mr Benjamin
We acknowledge receipt of your request for information.
This is receiving attention, and we will provide you with a response as soon as possible.
Regards, Louise
Louise Adamson
Committee Officer
Shetland Islands Council
Dear Shetland Islands Council,
Please note a reply to this FOIA request is now overdue. Please reply ASAP
Yours faithfully,
Joel M Benjamin
I acknowledge receipt of your email below and apologise that a response has not been issued to you.
This will now be reviewed and processed as an appeal due to a non-response.
You will receive a response from the Council to your appeal as quickly as possible, but within 20 working days.
If you do not receive a response by 31 January 2025 please contact [email address]
FOI Administrator
Shetland Islands Council
Corporate Services Department
8 North Ness
LERWICK
Shetland
ZE1 0LZ
Tel: 01595 744554
www.shetland.gov.uk
Dear Joel
I refer to your freedom of information request dated 25 November 2024.
I can advise you that in terms of Section 17 of the FOISA, the information you are seeking is not recorded information held by the Council.
However, in response to your questions, I can advise as follows:
1. If/how you've updated internal risk registers to reflect physical climate risks not being adequately priced/forecast? due to the exclusion of tipping points and other known limitations?
Internal Risk registers have not been updated to reflect physical climate risk.
2. If/ how investment consultants you engage with have updated their models to include climate tipping points following expert and member criticisms since 2023?
Shetland Islands Council does not hold this information.
3. Have you updated investment strategy statements & other related investment policy documents to reflect growing physical climate risks?
The Shetland Islands Council investment strategy has not been updated to reflect growing physical climate risks.
4. Have you discussed climate risk modelling flaws/limitations at the pension fund committee since the 2023/24 report publications? and if so have you changed your approach to correct for them?
This has not been discussed at the Pension Fund Committee.
5. Have you reviewed/ updated investment consultant procurement briefs/ mandates to include tipping points & reflect/ help manage mounting physical climate risks since July 2023?
No.
6. Have you reviewed/ updated AM mandates to reflect/ help manage mounting physical climate risks since July 2023?
No.
7. In your experience, have Asset Managers meaningfully changed where and how they invest on your members behalf - based on investment consultants climate scenario analysis modelling outputs? If so how? - providing relevant examples.
Shetland Islands Council does not hold this information.
I trust that this response meets your request. However, if you are dissatisfied with the way in which the Council has dealt with your request for information then you may ask the authority to review its actions and decisions in relation to your request, by submitting a formal appeal. The process for lodging appeals is set out in the attached leaflet.
Yours sincerely
Jayne Irvine
Business Support Assistant
Shetland Islands Council
Executive Services
Office Headquarters
8 North Ness Business Park
Lerwick
Shetland
ZE1 0LZ
Ref. FOI 16079
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