Mark Conrad 27 July 2023

'Flawed' climate change advice putting pension funds at risk

Flawed climate change advice putting pension funds at risk image
Image: Andrii Yalanskyi / Shutterstock.com.

Local Government Pension Scheme (LGPS) funds are being put at risk by ‘flawed’ advice on the financial impact of climate change, according to a major new study.

A report by the think-tank Carbon Tracker, which monitors the impact of climate change on financial markets, suggested many high-profile consultants to the LGPS were underestimating the likely consequences of global warming on pension fund investments.

Last year the Department for Levelling Up, Housing and Communities consulted the LGPS on reporting of climate risks and urged funds to obtain ‘proper advice’.

But, according to Carbon Tracker, many LGPS funds have continued to rely on investment advice from consultants who draw on economic analyses that underplay climate change ‘tipping points’ and the likely impact on global markets.

Carbon Tracker warned: ‘Funds are advised global warming of 2 to 4.3C will have minimal impact on members’ portfolios, contrasting with scientific research suggesting warming on this scale would pose an existential threat to human civilisation.’

This article was originally published by The MJ (£).

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