Climate-Proofing SA Retirement Funds

This is the full final report from our Climate-Proofing Retirement Funds events in July/August 2019. Here’s the brief interim report. The videos of these presentations can be viewed on our YouTube channel.

Our summary: It is the moral, fiduciary and practical responsibility of all asset owners such as retirement funds to urgently align portfolios with a rapid global transition to a low-carbon economy, if dangerous climate breakdown that threatens investors both physically and financially is to be averted.

Asset owners and asset managers are strongly encouraged to join the Climate Action 100.

Some key climate-economy developments since our events

  • The climate crisis is damaging the ability of the land to sustain humanity, with cascading risks becoming increasingly severe as global temperatures rise, according to a landmark UN report compiled by some of the world’s top scientists. (The Guardian, 8 August 2019)
  • Arctic wildfires spew soot and smoke cloud bigger than EU: A cloud of smoke and soot bigger than the European Union is billowing across Siberia as wildfires in the Arctic Circle rage into an unprecedented third month. (The Guardian, 12 August 2019)
  • MoneyWeb special report on ‘Sasol’s lack of accountability’: Since 2005 Sasol has failed to meet any of the greenhouse gas (GHG) emission targets it has set for itself. Yet these targets have been revised upwards three times, with little explanation or acknowledgement from the company. (19 August 2019)

Fiona Reynolds: The PRI and climate change

Slides: Climate and PRI – Fiona Reynolds – UN PRI

Three key insights:

  • The data and tools to address climate change through investment practices exist and just need to be applied.
  • As much as trends and research are global, there is a lot of useful information available at the local level.
  • The roles and responsibilities of each stakeholder group in the investment chain are critical to ensure that we address things effectively.

Three key action points:

  • PRI will be setting up a local PRI signatory working group / committee to identify the ESG priorities of local investors and then catalyse projects with respect to these priorities.
  • We will also be liaising with Asset Consultants regarding their role in the chain – to work toward removing blockages and leveraging influence for positive impact.
  • We will continue to put pressure on the regulator and policymakers to work toward creation of a policy and regulatory environment conducive to RI.

Luleka Dlamini: The IPCC’s Special Report on 1.5C warming: what business should consider next

Slides: Climate Science Overview CT – Luleka Dlamini UCT

Coleen Vogel: Climate change and South Africa

Slides: Climate Science Overview Jhb – Coleen Vogel Wits

Brent Cloete of DNA Economics: Transition Risk

Slides: Transition Risk – Brent Cloete DNA Economics

  • Pension fund boards need to develop a transition risk policy
  • Pension funds need to require asset managers to evaluate the transition risk within their existing portfolios, and provide sufficient information to funds to disclose it in line with the TCFD recommendations
  • Pension funds need to require an approach to minimizing transition risk as part of their mandate to asset managers.

Just Share and Fasken: Fiduciary duty and climate risk

Slides: Fiduciary duty – Rose Hunter Fasken – Tracey Davies Just Share

David Le Page of Fossil Free SA: Divest to end the carbon development paradigm

  • Retirement fund beneficiaries face physical, social and financial risks from being invested in fossil fuels
  • There are huge hidden costs to sticking with the ‘carbon development paradigm’
  • Divestment is ethical, prudent and practical

 Diaan Janse van Rensburg: A proposed ESG fund from the Efficient Group