Pension funds need to successfully transition in a high warming climate scenario. Otherwise they face challenging times.
Photo credit: Zyanya Citlalli / Unsplash+
David Carlin's newsletter highlights the role of pensions in the context of climate transition.
"Pension funds are among the world’s largest asset owners and key to the financial sector’s climate transition. Today’s newsletter breaks down the Climate Policy Initiative’s “State of OECD Pension Funds’ Climate Transition” report that analyzed 594 pension funds valued at USD 22.5 trillion on their climate transition progress", as quoted in the recent newsletter.
Massive transition risks for pension funds
David Carlin: "Given pension funds’ long investment horizons, they are exposed to both transition and physical climate risks that threaten asset values and returns. Failing to transition successfully in a high warming climate scenario could wipe 33 percent off pension fund returns worldwide by 2050 and that is without adjusting for inflation (Ortec Finance, 2025)."
Fiduciary Duty of pension funds
Moreover, pension funds have a fiduciary duty to address long-term systemic issues and act in their beneficiaries’ best interests.
Over the past 6-7 years a number of lawsuits against pension funds have emphasized their duty to address climate risk:
Read more about those lawsuits as well as transition risks of pension funds here.
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D. A. Carlin & Co helps clients navigate these transition planning through strategic briefings, practical capacity-building workshops, and regulatory reporting support. Book a call with us today (info@dacarlin.com) and find out how we can give you and your team the future-ready skills and strategies you need.
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investESG
investESG
