The link between climate change and financial markets: AMNT Open Day

Former Equity analyst and Climate Change expert Meg Brown was the next speaker at the AMNT open day. Meg accepts that while she clearly sees a obvious link between climate change and investments that not everyone shares her views.

She doesn't think that equity analysts are all that skillful. Their skill is mostly in the selling. It is all about "belief" and what you expect to happen.

How else can you explain that companies are still spending a colossal $674 Billion on looking for more fossil reserves when we can only at best burn 1/3rd of existing reserves without causing climate change disaster.

Meg used the example of UK coal electric power provider Drax which is successfully changing from burning coal to bio mass. It went from facing bankruptcy to becoming a profitable success by adapting its business to climate change.

Meg spoke about the current floods as being physical evidence of climate change and how we need to look at the impact on insurance companies. There was a bit of debate in the Q&A about whether the increase in insurance pay outs due to extreme weather in recent years is due to climate change or the development of the insurance industry.

 

We were then split into work groups and looked at different investment funds from point of view of climate change risk. This made me realise that the lack of transparency in many funds made this very difficult if not impossible with some funds. 

Some questions that Meg suggested we should be asking our fund managers - 

Q. Where is the climate change risk in our fund? (And what are you doing about it)

Q. How do you see this risk developing?

Q. How are you hedging that risk? 

Implications of Climate Change for Investment Returns and for Beneficiaries: AMNT Open Day

This is the first in series of posts on last weeks AMNT open meeting and AGM.

I was really pleased to see that there was a quite a few UNISON LGPS member nominated reps present.

The morning was a training session on the implications of Climate Change on Investment returns and for our Beneficiaries. Bearing in mind the very unusal weather we have been having this winter, this is a very topical subject.

Our meeting was opened by our Joint Chair Barry Parr who introduced Catherine Howarth. (see picture) who is a former pension trustee and the CEO of ShareAction (use to be called "Fair Pensions").

Catherine believes that Trust schemes have clear duties to take Climate Change seriously but with Contract schemes it is less clear legally but still a compelling reason to act.

She spoke about the Greenlight report launched recently with Pension Minister Steve Webb MP. There is a need to "nudge" pension schemes into managing the growing risk of climate change. There are a number of good schemes that are addressing this but many others who clearly "don't get it".

One sign of a good scheme is how well it communicates with its members.  Schemes needs to organise relevant training, look at governance policy development and carry out risk assessments. Need to look at low carbon investment opportunities and take into account that Auto-enrolment will bring in many young people into pension schemes, who will bear all the investment risk  of climate change in the coming decades.

Next was a speaker from PRI then climate change expert Meg Brown.