Unlike any other financial product, pensions, whether provided by government, employers or accumulated by individuals themselves, aim to provide people with a livelihood when they no longer work.

The income derived from a pension, in the majority of cases, is what determines whether we are able to lead an independent and dignified life after retirement. A good pension system is therefore a critical underpinning of any society.

There are three key risks to pensions worldwide that need immediate attention. These are climate change, ageing populations and the new work economy. A growing risk to pensions worldwide rests in trustees not having a climate change policy or having no targets for investment in low-carbon, energy-efficient or sustainable assets.

The United Kingdom, in fact, has acknowledged the risk of climate change generally, but in particular to pensions. The UK Department for Work and Pensions, in response to a public consultation, published Clarifying and Strengthening Trustees’ Investment Duties: Government Response 2018, in which trustees will be required by October 2019 to, inter alia, update or prepare to set out in their ‘statement of investment principles’ how they take account of financially material considerations, including, but not limited to, those arising from environmental, social and governance considerations, including climate change.

This replaces the existing requirement to report their policy on the extent, if at all, to which social, environmental or ethical considerations are taken into account. While there was some resistance in the consultation process against the explicit naming of climate change, the government, in its response, concluded that “the systemic and cross-cutting nature of climate change means that it should be retained as a named factor for consideration”.

Read more @Jamaica Gleaner