A major report recently released by United States federal regulators warns that climate change is starting to disrupt U.S. financial markets, as the costs of wildfires, floods and droughts penetrate insurance and mortgage markets.

The report by the bipartisan Commodity Future Trading Commission (CFTC) lays out how escalating climate risks could threaten pension payouts over the coming decades. Divya Mankikar is an investment manager at CalPERS, the public pension for California’s public employees and the world’s largest pension fund. Mankikar was one of the lead authors of the CFTC report.

MANKIKAR: At CalPERS, we have been looking at climate change for several years, in terms of its impact on our investment portfolio. We manage about $410 billion in assets that are globally dispersed across different asset classes, and what we found is that climate change is material in each and every one of those asset classes.

That research led CalPERS last year to declare climate change as one of the top three risks to CalPERS. I think the significance of climate risk is common across so many different pension funds. There’s really nowhere for us to hide from climate change, given our size, and given the fact that we are meant to deliver pension and health benefits to public employees over multiple decades.

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