Climate-Proofing Retirement Funds: first thoughts

Facilitator Malcolm Gray at our Cape Town event
Facilitator Malcolm Gray at our Cape Town event

We held our first-ever ‘Climate-Proofing Retirement Funds’ events in Cape Town and Johannesburg this week, focused on asset owners, particularly retirement fund boards. We were honoured to host Fiona Reynolds, CEO of the UN-supported Principles for Responsible Investment, as a keynote speaker at both events.

LINK TO ALL PRESENTATION VIDEOS

Our Johannesburg event was 80% sold out, and we had to expand event capacity to meet demand in Cape Town.

If you attended but haven’t yet offered feedback, please fill out our brief feedback form here.

The context for these events is a global climate emergency, and the implicit imperatives set by the IPCC SR1.5 report in October last year: that the world must cut carbon emissions by 45% and by 100% by 2050, or risk catastrophic effects for hundreds of millions of people, and ultimately, the possibility of the breakdown of a global environment capable of supporting human civilisation.

Our specific target audience, retirement fund trustees, was fairly well-represented in both Cape Town and Johannesburg, though participants also expressed frustration that trustees are not a lot more engaged and active on these issues.

A key message from both events was that much as trustees may rely on asset managers and asset consultants for advice and guidance on managing these risks, the responsibility for asset allocation and risk management always ultimately lies with trustees.

Speakers also debunked two dangerous myths:

  • That trustees are answerable to fund members. (Not true.)
  • That it is a duty of trustees to maximise financial returns. (Not true.)

The facts are that:

  • Trustees may take advice from asset managers and asset consultants, but the final responsibility for asset allocation does lie with them. As Fiona Reynolds put it, “You can outsource asset management. You can’t outsource your responsibility.”
  • Trustees must exercise independent judgment as fiduciaries, with a duty of loyalty to the fund itself.
  • Their judgment should be aimed at ensuring the long-term sustainability of the fund and its ability to fully serve its members (which may at times require avoiding high short-term returns if those returns will compromise the long-term sustainability of the fund).

Our full speaker list, with links to their presentations for download (or view as slideshares here):

LINK TO ALL PRESENTATION VIDEOS

Many thanks to all of them, and to our expert facilitator, Malcolm Gray of Libryo.

PRI CEO Fiona Reynolds speaking in Johannesburg
PRI CEO Fiona Reynolds speaking in Johannesburg

Other themes that emerged consistently were that adopting an ESG approach to investment does not require losing returns, and indeed, can enhance them; that a just transition for workers in the coal sector is possible and necessary; that all investors face considerable economic transition risk; and that the global fossil fuel divestment movement is strong and still growing fast.

We will be sending out fuller reports, videos and summaries of the events over the next couple of weeks.

Here is some of the early feedback:

  • 100% of participants want more events on these subjects.
  • 100% plan to raise the issues we covered within their own organisations or spheres of action.
  • Most have rated the overall quality of our content and event organisation at 4 or 5 out of 5.

Some notes on event sustainability: These events were planned to take advantage of Fiona Reynolds’ existing travel plans. Fossil Free SA’s travel to Johannesburg was consolidated with travel to the IRFA conference in Durban. Where possible we used local speakers or videoconferencing. All catering was vegetarian. (We were justly called out for having bottled water on the tables in Cape Town.)