Local Government Pension Funds are failing to protect themselves from the financial risk posed by climate change, a new report has warned today.
The report, published by Friends of the Earth and Platform London, assessed how some of the largest LGPFs were addressing climate risk.
It found the majority of the funds have not measured climate risks and only four were developing strong climate change strategies such as divesting away from fossil fuel companies.
It also revealed that many of the funds do not have clear goals or targets when using shareholder engagement with companies to address climate change.
‘Although many Local Government Pension Funds recognise the financial risk posed by climate change, they are failing to take sufficient action to address it,’ said Deirdre Duff, divestment campaigner at Friends of the Earth.
‘Less than 20% of fossil fuel reserves can be used if we are to meet the goals of the Paris Climate Agreement. It makes neither ethical nor financial sense to invest in the fossil fuel industry when such a proportion of its assets are unburnable.’
Sakina Sheikh of Platform London added: With the climate crisis underway, and a financial consensus building in the UK finance sector - it is clear that addressing climate risk has become an expected practice to ensure councils are not invested in soon-to-be stranded assets.’