On September 10th, the Asset Owners’ Disclosure Project published a ranking of the 100 largest global public pension funds on their responses to climate change. In fact, this is the first segment of a four-part report assessing the global pension sector’s response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Three observations come to mind.
First, of the eight Canadian pension funds in the top 100, four are in the first quartile and three are in the second quartile. One fund – OMERS – finds itself in the top end of the third quartile, perhaps something that its management will seek to address soon.
Second, this exercise drives home the message that it’s not just investment managers who are feeling the competitive pressure to integrate ESG; asset owners face public scrutiny, too. In this case, we’re talking about climate change, an issue we’re hearing a lot about these days, and one which is now recognized as a systemic issue that is difficult, if not impossible, to diversify away from. As beneficiaries of these pension plans, we should indeed expect that it is being properly addressed by fund managers.
Third, those who are not part of the top 100 should take heed of fact that the magnifying glass of ESG is shifting to asset owners and creating a race to the top in responding to climate change. It may not be regulators forcing you to disclose what you’re doing, it may well be your beneficiaries and society in general.