Piers Forster

Writing in the FT, Piers Forster, Chair of the UK’s Climate Change Committee is compelled to state what many of us would consider obvious.

This is precisely the wrong time to lose the UK’s informed political consensus on tackling climate change. The science I do for my day job tells me that rapidly moving to renewable energy, with action on methane leaks from fossil fuel production and farming, could immediately reduce warming rates. That should be a shared goal. By hitting our targets, we will provide a template for all developed economies. Escalating climate damage around the world need not become the new normal.

I wrote earlier this week of Carbon Tracker’s fierce defence of science against claims by some economists that the risks of climate change to pension schemes have been overstated. By placing maths over science, financial economists  reinforce the message that time and money invested in TCFD and managing assets towards a just transition are doing us no favours.

If ever there was a risk of an intergenerational transfer, it is the risk of climate change. The evidence is not hypothetical, it is everywhere we look around

What’s missing from pensions work on climate change?

In a word “recognition”. There are three ways pension schemes can approach the management of climate risks,  they can see TCFD as a compliance obligation or as a risk management tool. Or they can see it as a marketing opportunity.

There is nothing wrong with commercial pensions that go the extra mile embedding ESG into their investment strategy, saying so. But this can’t just be blowing one’s own trumpet, there needs to be an evidence base to claims that a pension scheme is making a difference and it’s time that the Pensions Regulator, which has taken responsibility for the monitoring of TCFD , started to promote instances of best practice.

Earlier this year, AgeWage conducted a survey of master trust TCFD reporting in conjunction with Minerva and with help from Robert Gardner. We came to our work without expertise but using the eyes of ordinary citizens. We were surprised that some of the best reporting came from master trusts too small for most people to have heard of – “Options” anyone? Some of the firms who had done the best work were getting no external recognition, it seemed wrong to us.

Recognition is needed of those consultants and trustees who do the work and explain what they are doing through TCFD reporting.

The academic work of Piers Forster in  Climate Change Reporting can easily go unnoticed. Similarly the advocacy of pension spokespeople such as Maria Nazrovia-Doyle and Nico Aspinall can be dismissed as “marketing”.

But , though the poles of scientific academia and the promotion of fund management often repel each other , on climate change they need to attract.

Because the threat to our futures from not reporting on and acting on the impact of pensions on the planet is undeniable.

I fear that we are in the first of what will be many backlashes against ESG, prompted by a Government taking its eye off the ball. The tension between financial economics and climate science is not going away and is probably necessary for attention to continue to be focussed on the targets pension schemes have set themselves.

Those targets have been set by people who will probably not be in place to see them missed or hit, already we learn that Maria is leaving Scottish Widows, Nico is nomadic. But the targets and their fulfillment remain with the pension schemes and must pass from one management team to another so that by 2030 and 2050 there are people in place to account for success or failure.

The management of climate change  is too important a subject for it to be reported on retrospectively, a backward looking admission of failure , thirty years hence , is of little use to those who look back in anger. We are managing our children and grandchildren’s futures, not just our own pensions.