Trillion Dollar Transformation, a collaborative initiative by Mercer Investment Consulting (Mercer) and the Center for International Environmental Law (CIEL), is designed to educate pension fund fiduciaries on the challenges and opportunities presented by climate change.
Two cutting edge reports have been released detailing the financial and legal challenges climate change presents for pension fund trustees. The key findings and recommendations have been summarised in this 2 page document.
Climate Change Investment Risk Management for US Public Defined Benefit Plan Trustees is a financial analysis by Mercer, identifying the various approaches trustees can use when considering investment risks from climate change. Mercer’s findings demonstrate that the average US public pension is markedly exposed to the potential for billions in lost asset value under a Transformation scenario, which is aligned with a 2oC global temperature increase outcome, the baseline goal of the 2015 Paris Climate Agreement.
In its companion legal analysis, Trillion Dollar Transformation: Fiduciary Duty, Divestment and Fossil Fuels in an Era of Climate Risk, CIEL reviews how climate change may affect the fiduciary obligations of pension fund trustees and concludes that a failure to acknowledge and respond to these financial risks may constitute breaches of trustees’ fiduciary duties.