Editorial
Mark Dunne Editor
m.dunne@portfolio-institutional.co.uk
Climate change: The gathering storm It is probably the biggest threat that the human race has faced and pension scheme trustees are on the
front line fighting against it.
They are working to protect the planet, and therefore their portfolios, from the effects of climate change. This is in stark contrast to many of our elected members of parliament, who appear to be more interested in making headlines than taking action…and action is what’s needed. Our cover story this month looks at the reasons why it snowed in the Sahara Desert last year, why there were cyclones in Africa and why almost 200 people were killed by floods in Japan. The harmful gases that we pump into the atmosphere are making extreme weather events such as these more com- mon and are putting civilisations and the natural world at risk, Sir David Attenborough said when addressing the UN’s climate change summit in December. Pension schemes and other institutional investors are taking the lead in reducing the man-made dam- age to our world. This involves investing in some of the stock market’s worst polluters, which are typ- ically oil and gas companies, and working with their directors to set climate change reduction targets or fund cleaner energy sources. Indeed, Royal Dutch Shell agreed to invest up to $2bn (£1.57bn) a year in renewable energies following several discussions with its shareholders. However, a third of those sitting in the House of Commons have called on the £700m Parliamentary Pension Fund to kick all fossil fuel companies out of its portfolio – of which it has around £11m invested in Royal Dutch Shell and the same amount in BP – instead of working to change those busi- nesses from within. Divest Parliament, which has led the campaign to remove oil and gas companies from the MPs’ retire- ment fund, wants to “decarbonise capitalism”. But by favouring exclusion over engagement some could argue that they are not helping to decarbonising the world, which is the point, isn’t it? MPs have the power to reduce the damage to our climate as the battle is not limited to investing. They could legislate, to create the conditions that will help the UK move to a low carbon economy. Ignoring the problem will not make it go away. Green party MP Caroline Lucas has called on all pension funds to “divest from fossil fuels and invest in positive solutions to the climate crisis”. But isn’t a positive solution to this problem what engage- ment with the biggest commercial polluters is trying to achieve? The Greater London Authority’s pension fund, several universities and local government retirement schemes in Southwark and Islington are already taking such measures. Perhaps a bit more education is needed on how those controlling huge pots of capital can contribute to decarbonising our world. Our cover story starting on page 24 is a good place to start.
Issue 84 | May–June 2019 | portfolio institutional | 3
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