Industry does not take climate risk to heart in its investment decisions, PP research reveals.
The latest Pensions Buzz poll - conducted by Professional Pensions between 22 August and 23 August among 101 trustees, scheme managers and pension professionals - found more than half (53%) did not see climate change as a financially material risk to their own or their clients' portfolios.
Some even dismissed the notion of climate change, while others said it has to be taken into consideration alongside other factors.
One commentator said: "Climate change is an overblown nonsense whose so-called catastrophic consequences are perpetuated by the climate change doom-mongers who need to keep the discredited idea going to justify their jobs."
However 31% disagreed and in some cases violently. "You would have to be a fool not to take into account the risks of climate change," said one.
Yet the same person also warned "there is also the ‘risk' that climate change will not prove to be as extreme as some (but not all) scientists think, thus leaving schemes with inappropriate portfolios".
One in eight sat on the fence.
When asked about whether trustees should be legally bound to consider environmental, social and governance (ESG) factors when making investment decisions, some 76% of respondents said they should not - arguing it was the job of trustees to maximise investment returns for members.
One commentator explained: "They should simply remain bound by their duties under trust law, and as long as they do nothing illegal they should be left to invest the assets for the good of the beneficiaries, taking the beneficiaries' wishes into account if appropriate - not some arbitrary moral standard set by a transient government."
These issues are not set in stone and different people have various views thereby making legislation totally misguided, another added.
However 18% disagreed and argued trustees should face a legal requirement, with one siding with the Law Commission's opinion on the issue. "If financially relevant then ESG should be taken into account. If not financially relevant then only take into account where this reflects membership views and is not detrimental," the same person continued.
Looking at how far respondents take ESG into account when making or advising on investment decisions, around four in ten respondents said they do not take ESG factors into account when coming to an investment decision.
Some 22% said they fully embed ESG elements into their decision making process, 21% said they have begun to look into the issue and 18% thought they may do it in the future.
Among the 39% who do not take ESG factors into account, they either feel uncomfortable with the concept or think it could be an obstacle to making some investments.
One respondent said apart from arms manufacturers, tobacco companies and providers of online gambling, they feel free to invest in what they like.
The focus on return was echoed by another respondent who said: "It may get used to differentiate between two managers who are otherwise equally, but otherwise, it's all about return."
A different commentator said ESG factors are in their early days and it is not straightforward to assess them, "in spite of what some experts tell you".
When asked what barriers prevent climate risk being taken into account, around a third of respondents felt trustee boards were the biggest barrier.
This was the most popular answer, followed by advisers not talking to trustees (24%), a lack of legal clarity (16%), additional expense of investment (12%), 9% for ‘other' and 7% for short-term incentives.
While climate change is a major problem, ESG risks being politically driven rather than by economic logic, argued one respondent. "If you really are concerned about climate change you should be making major changes to your lifestyle, not ticking a box by avoiding investing in firms whose products you still use," the same person added.
A different pundit thought short-term crises prevent some boards from addressing climate change in a meaningful way.
One person challenged the premise of the question and said: "Your question takes it as given that all trustee boards should be considering climate risk - I don't agree."
Advisers stepping up to the plate and prioritising climate risk as a serious problem will put the theme at the front of pension investment decisions, according to 24% of responses.
Slightly less, 20%, said a higher media profile about the impact of climate risk would help, followed by better trustee education (18%), the law on pensions investments should be clarified (16%). The least popular responses were more product development (14%) and ‘other' (8%).
Other changes respondents drew attention to include better analysis of investment risk and more effective government policy.
A commentator said: "Advisers need to highlight it more for it to be considered more fully in pension investment decisions but that is not saying this is necessary - trustees must take that decision."
Climate change requires major change to what and how people consume, which means more than just avoiding poor investments, another added.
One pundit wryly observed: "Trustees need to think long term rather than to the post meeting sandwiches."
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