As the United Kingdom sweats under record-high temperatures, pension fund managers on this side of the pond are being warned about their net-zero targets.

Pension fund administrators should continue to adopt net-zero emissions targets for 2050, and have their targets vetted through third-party certification standards — such as the Science-Based Target initiative or Glasgow Financial Alliance for Net-Zero — according to Building Climate Resilience in Canada’s Pension Funds, a report released by the Smart Prosperity Institute on Wednesday. The institute is a policy think tank based at the University of Ottawa.

Many Canadians are unaware of how their retirement savings may back industries or sectors with significant climate risks, a Smart Prosperity Institute spokesperson said in an email.

Pension funds should require their portfolio companies to have their climate targets vetted by third-party global initiatives, and should also disclose or source the resulting information in their own reporting to stakeholders, the report says.

While investments in climate solutions such as renewable energy are welcome, a focus on climate risk management and disclosure is key to ensure climate resilience.

“Commitments around green or transition assets cannot compensate for assets that do not meet” the requirement to transition to net zero by 2050, the report says.

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