Investors team up for climate change asset allocation study

A group of major global investors including Dutch pension funds APG and PGGM and US giants CalPERS and CalSTRS are joining a study exploring the potential impact of climate change scenarios on asset allocation.

The study is led by consultancy Mercer, the Carbon Trust and the International Finance Corporation (IFC), the private sector investment arm of the World Bank.

The Grantham Research Institute on Climate Change and the Environment and Vivid Economics have been appointed to lead parts of the research on the economic and financial impact of climate change scenarios.

The research will use a scenario-based framework to identify potential investment opportunities and possible future risks related to climate change. It will consider a variety of climate change scenarios and map the potential risks and opportunities of these outcomes for returns on asset classes in different regions over the next 40 years.

The study report, due later this year, will consider recommendations for policymakers and industry bodies.

IFC director for environment and social development Greg Radford said private sector capital was important in the fight against climate change. Pension funds needed a clear understanding of the risks and opportunities in order to allocate capital.

Other investors involved include AP1, AustralianSuper, British Columbia Investment Management Corporation, the Environment Agency Pension Scheme, the Maryland State Retirement and Pension System, the Norwegian Government Pension Fund, the Ontario Municipal Employees Retirement System and VicSuper.