Protect Your Pensions: Resources to Engage your Pension Fund on Climate Change

The threat of climate change and the global efforts to combat it are growing. Just as climate change threatens millions of lives, communities, and ecosystems, it presents an urgent financial threat to our pensions. With their trillions of dollars of assets under management, institutional investors like pension funds will be key players in the shift away from fossil fuel dependence and toward investment in renewable energy and a low-carbon economy. However, monitoring and responding to climate-related financial risks is not just a financial or moral imperative for pension fund trustees, but also a legal one.

The financial risks of climate change are becoming more apparent by the day. Major financial institutions are warning of the dangers of climate-related financial risk, yet many investors — including many trustees of public-sector pension funds — have not taken adequate steps to protect their portfolios from these risks.

The trustees of these funds have obligations — called fiduciary duties — to manage the assets under their care prudently and loyally, and to monitor their investments to ensure they remain prudent. A critical part of this analysis should be an evaluation of climate-related financial risk and how it affects public-sector pension funds, which invest over long periods of time and have a very low tolerance for risk.

This page contains several resources for people who wish to engage with their pension funds to ensure that their retirement assets are protected against climate change and climate risks. These resources include:

• Letter to your Pension Fund: Building on this form letter, you can write to your pension’s board of trustees, with several specific and relevant questions about their management of fund assets in the face of climate change.
• User Guide/FAQ: This guide explains the contents of the letter to your pension fund and how to use it in greater detail.
• Trillion Dollar Transformation: These two reports, authored by Mercer Investments and the Center for International Environmental Law, discuss the financial and legal challenges facing pension funds due to climate-related financial risk.
• What Climate Risks Trigger (forthcoming): This report presents an expanded legal analysis of the legal duty to monitor, one of the key duties to which your trustees need to adhere.
• Newsletter: Sign up to receive quarterly newsletters that provide updates on: financial considerations of and monitoring of climate risk; divestment announcements of major pension funds; and fiduciary duties in an era of climate change.