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Will Climate Change Cost Pensions Trillions?
Michael Bow of Professional Pensions reports, Ignoring climate change risk will cost schemes trillons:
Schemes
must factor in climate change risk to their asset allocation
strategies over the next two decades or face losing trillions of
pounds, Mercer warns.
Research
from the consultant - commissioned by a group leading schemes including
BT Pension Scheme - anticipated climate change policy will account for
10% of a pension fund's portfolio risk by 2030, with costs hitting
about £5trn by 2030.
Mercer said funds could combat the
growing policy risk headache by diversifying their portfolios away from
equities and bonds into "climate sensitive" assets.
These include
infrastructure, real estate, private equity, agriculture land,
timberland and sustainable assets. Mercer forecasts a portfolio trying
for a 7% return could cancel out the climate change risk by allocating
40% of its funds to these assets.
The Environment Agency, participants in the research, welcomed the switch to a policy-led asset allocation strategy.
Environment
Agency head of environmental finance and pension fund management
Howard Pearce said: "We think all pension funds will need to adopt a
climate change-proofed financial investment strategy in the future to
enable them to fulfil their fiduciary duties.
"We also want our
pensioners to retire into a similar environment than we enjoy today and
not one that is affected by the extremes of climate change that could
reduce their life expectancy."Mercer also predicted the
increased investment in low carbon technology would increase portfolio
risk by 1% but be offset by a predicted investment of about £2.5trn by
2030 in this area.
Mercer chief investment officer Andrew Kirton
said: "Institutional investors should be factoring long-term
considerations, such as climate change, into their strategic planning.
"Mercer
is pleased to have had the opportunity to kick start such strategic
discussions with a group of leading global investors."
Mercer
used its ‘TIP' framework to judge the impact of climate change, a
formula allowing pension funds to manage risk based on low carbon
technology (T), physical impacts (I) and climate policy (P).
Emma Boyde of the FT reports, Pension funds plan action on climate change risks:
At least two pension fund sponsors of a research project into
the risks for investors of climate change intend to change or advise
changes in their asset allocation as a result of the findings.
The
collaborative project*, led by Mercer, the investment consultants,
found that climate change policy could contribute as much as 10 per cent
to portfolio risk over the next 20 years and identified asset classes
that could be beneficiaries as well as those that were likely to be
negatively affected.
“The risk numbers indicate this is a very
real risk,” said Helene Winch, director, head of policy at BT Pension
Scheme Management, adding that she intended to pass the information
back to BT’s risk management teams.
BT’s pension scheme is one of 14
global insitutional investors that supported the research, which also
received the backing of the International Finance Corporation and
Carbon Trust.
Speaking afer the launch on Tuesday, Howard
Pearce, head of environmental finance and pension fund management at
the UK’s Environment Agency, another of the partners, said the Agency’s
scheme would change its strategy as a result of the findings.
The
research team, led by academics from the Grantham Research Institute
on Climate Change and the Environment at the London School of Economics
and Vivid Economics, an economics consultancy, examined four scenarios
that could take place in the next 20 years.The two most likely
scenarios, the research team decided, were that there would be a
regional divergence in response to climate change issues, or worse,
there would be a delayed response leading to harsh policy measures in
perhaps a decade. The two least likely scenarios, it concluded, were
that strong internationally co-ordinated action would take place or
that there would be significant climate breakdown in the next 20 years.
It
looked at those four scenarios and considered three broad risks to
portfolios: technology (investment flows into new technology); impact
(real physical impact of climate change); and policy (international and
domestic agreements and regulatory responses). The team concluded that
continued delay in climate change policy action and lack of
international co-ordination could cost institutional investors
thousands of billions of dollars over the coming decades.
It
found investors could benefit under most scenarios from increased
allocation to infrastructure, real estate, private equity, agricultural
land, timberland and sustainable assets. Under certain scenarios, even
the likely scenario of delayed action, certain asset allocations were
found to have a negative likely outcome.
The modelling was
applied to a hypothetical “typical” portfolio with 34 per cent in
developed large-cap equities, 13 per cent in emerging market equities,
18 per cent in global government bonds, 26 per cent in investment grade
credit and 9 per centin property.
*Climate change scenarios - implications for strategic asset allocation, (Feb 2011)
You can read the Mercer report by clicking here.
It provides a thorough discussion on climate change and its potential
impact on various asset classes. There is a lot of uncertainty
surrounding climate change but pensions should be thinking hard about
how it and other secular trends will impact their portfolio. Will
climate change cost pensions trillions? I doubt it. Moreover, it will
present pensions with new opportunities. In fact, I firmly believe that
pensions stand to make very profitable investments in both private and
public markets if they play this theme wisely.
»
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Just as I predicted. The climate change fanatics come out in force to denounce ANTHROPOGENIC climate change (from the very first comment! see above), when the article made NO MENTION of anthropogenic climate change, and whether or not climate change is anthropogenic or not is completely irrelevant to the subject of the article.
Sigh.
Perhaps it was the introduction of the word "scheme" in the article? ;-)
Judging by the imbecilic comments, most of you have no clue what you're talking about. Climate change is a scam? Yeah, I wish it were the case...
The climate does change - no scam. History says it's so, markers from the past; not predictions of the future. Even before (especially before) "man" - lots of climate change.
Humans have created a lot of pollution - True.
Now with AGW there is the arrogance to state CO2 is the cause. Not a simple correlate, or even a strong correlate - the cause - and by paying a tax/reducing carbon footprints/etc that this cause will be reduced and slow/stop AGW. Pollution generally is not the cause for panic, only this particular gas.
Reduce - Reuse - Recycle, yes, sure... and in that order. AGW - meh.
Too bad the Internet was not invented 100 years ago.
Could have given the same sort of drivel over the peak oil conspiracy.
"Peak oil, scam invented by TPTB", "abiotic oil", "we are swimming into oil"
100 years later, that is now, oil extraction has peaked, extraction is more and more delicate... And still people arguing over the possibility of peak oil...
How could it be different for climate?
In the US driven world, there is no future, no past, only the present.
It also strongly debases the US philosophical policy of the US: people, when aware of the issue, are unable to adjust and to correct the course of their actions.
Leo Kolivakis
Peddling yet more garbage i see? Hopefully you'll be consigned to a landfill sight too real soon
The Environment Agency, participants in the research, welcomed the switch to a policy-led asset allocation strategy.
Idiot Enviro Agency Alert - Govt Crony Research Alert - Bent Govt Policy Alert - Pension Wealth Destruction Alert
Schemes must factor in climate change risk to their asset allocation strategies over the next two decades or face losing trillions of pounds, Mercer warns.
Hasn't the peanut-brained, hard of hearing and impaired eyesight of Mr Mercer spotted both Cop-out-hagen and Cack-loon (Cancun) Mexico were complete failures to drive any policy direction?? The only Govt that has set targets, because nobody in the World will agree to them, is the loonatics of Britain and the hypocrites of the Enviro Agency who work from Grade 'F' (for fuking appalling) enviro rated office-buildings. Mr Mercer is certifiably delusional and unable to deal with reality, he shouldn't be anywhere near peoples pensions
Environment Agency head of environmental finance and pension fund management Howard Pearce said: "We think all pension funds will need to adopt a climate change-proofed financial investment strategy...
Let's be crystal clear about the Enviro Agencies crystal ball gazing. These delusional hysterics have been preparing for 10 years for global warming while Britain has progressively suffered colder and ever worse winters leaving Britain a complete shambles every winter because of their incompetence. The top online article in Britain 2 months ago was a link to the Enviro Agency predicting 10 years ago "snow would be a thing of the past... children just wouldn't know what snow looked like!" Yes you've guessed it the Enviro Agencies skills of predicting are the greatest contrarian indicator for where reality will be. Not only that but their miserable incompetence to face or deal with reality has already cost Britain £Billions because of these delusional retards have no grip on reality or what's happening on the planet.
"We also want our pensioners to retire into a similar environment than we enjoy today and not one that is affected by the extremes of climate change that could reduce their life expectancy."
Yes and there's no greater danger to life than cold weather, hot weather is easy to deal with. So the threat is the exact opposite of this pinheads advise and nobodies life expectancy is in more danger than when taking incompetent deluded Govt advise.
Leo Kolivakis, "In fact, I firmly believe that pensions stand to make very profitable investments in both private and public markets if they play this theme wisely."
The "theme" is on its way to the graveyard with a full escort dressed in black. What don't you get about 'on the way to the Knackers Yard" Mr Kockup? You're not ahead of the curve you're actually so far behind it you're still wanting to invest in Dodo farming??? The Dodos' are fuking dead Mr Kockup, and so is the Govt funded crony scientific and financial fraud that is climate change. Wakey F'ing Wakey
"Climate Change" nee "Global Warming" is a fraud on so many levels I felt the need to tear Leo a new one. However I see I am late to the party and Leo has run out of skin.
Well done.
let me lay it out for you
around dawn each day, as the sun rises, we get global warming
by evening, another cycle of global cooling
seasons change as earths relation to the angle of the sun changes
longer period determinate of global warming/cooling cycle
find a way to prove to me that these cycles are AGW related and i might listen to an AGW theory
til then....poppycock
i could cite about 1500 scientists who agree with me if i had the time
there are about thirty PHD holding scientistas on the AGW side,plus alot of money and talking heads
with all the obvious government lying, why o why do people who ought to know better choose to believe the AGW lie?
if it had an iota of truth to it, you prolly never would have heard a single word about it
CO2.
Save the planet! Stop breathing!...LOL.
Wait...I've got a better idea, before we stop breathing out the CO2 that is destroying the planet, we should just go ahead and deforest the entire planet because all those tree's are gonna die anyways and unleash their pent up carbon!
Oh...the humanity!
And don't forget to buy those dips in solars Leo, the planet is depending on you...ROTFL!!!
Put your money where your mouth is greentards.
My bet is, one way or another, the world population will have shrunk to 3-5 billion in 2100. The thirteenth century was a period of great population growth and wealth creation through East-West trade (silk/spice/gem routes). The fourteenth century saw a mega contraction of world population as the plague and wars (100 year war- Mongol deflation), saw world population shrink by 1/3. We may outperform them in this century if we stay on our current trajectories.
Precisely. A force of nature not of politics or will or economic fudgery.
Big Business has spent the last Century polluting the Earth... GigaTons of Poison... http://www.gigatonthrowdown.org/intro.php
But now, the Pensioners will suffer the clean up costs? I guess Bonus monies for the top are safe and sound it is only the lil guy who will get 12 inches of rock hard cock jammed down thier throat(s)?
Big Business says Pensioners must pay for clean up is what the headline should have read.
Typical bullshit, same outcome... differnet story.
and please all of you big business lovers that have been stupid enough too be brain washed that poison is good for us all... being pumped into our air supply, do me and your kids a favor... shut the fuck up.
http://globalchange.gov/publications/reports/scientific-assessments/us-impacts <--- see .gov? see it? got it? good!
Climate change is a fraud, but socialization of costs after privatization of profits is all too real.
"We must do it for the children."
Yeah, like that.
Bailouts, Carbon Credits, Tax Increases, War, Confiscation of Gold/Retirement Accounts, etc., etc., etc.
Climate deniers .. what, are you like, 25?
Always lived in town?
Live a few more years and it will be obvious, like it is to most people who haven't spent their lives looking at a TV set
Nothing to say more.
Cause we are on investment blog: please investigate how much money is Goldman Sachs willing to make witch CO2 trade, and than we may talk about oil cartel and their engagements.
Here is a simple experiment for you and your kids Thorny.
Take two old fashioned (recyclable?) glass milk bottles or large glass jars. Add about 3 inches potting soil or seed starting mix and a enough water just to make the soil damp. Add a bean seed and another 1/4 inch layer of soil to cover it. 1-2 more drops of water on top of where the seed is. Prepare the 2nd jar exactly the same way.
Now find a small birthday cake candle. Burn all of the oxygen out of one jar and replace with carbon dioxide using the lit candle (you can suspend it with a wire down in the jar until it goes out). Now seal that jar with your seed and CO2 inside. Be safe of course..watch kids around candles, etc. The CO2 is heavy and will naturally stay down in the jar. Plastic wrap with a rubber band or original jar lid will do. There are plenty of sources and experiments that will tell you the burning wax from the candle puts out mostly CO2. This is a great time to introuduce Faraday's experiments with a candle flame to your kids. If you are skeptical, you can also use a piece of dry ice suspended in the jar. Heck do a third jar with dry ice (follow safety precautions for handling the dry ice).
Leave your 2nd jar and it's seed unsealed - lid off - and open to the room air.
Put them both in a bright sunny window. Watch what happens to the bean sprout in the jar with just CO2. You will be surprised.
It is not intuitive that the plants we see all around us are mostly made from captured carbon from the CO2 in the air...but they are. Most of the plant material you see is made out of the carbon in the CO2. More carbon dioxide will grow bigger plants. They will kindly leave the oxygen for us. The seed sprout is cool to watch grow for kids, cool to capture on time lapse, etc. Great science fair project..wish they still did this.
Now, think about it, the earth is pretty much a closed system like the jar...so what happens if we get excess CO2 in our atmosphere? Remember carbon dioxide is heavy too.
Of course follow all safety precautions. Don't taunt happy fun bean sprout..etc.
Or you can just watch this;
http://www.youtube.com/watch?v=u1CPn9yTiFI
Damn I am sorry ZeroHedge but people just don't do science anymore.
My PhD's in complex fluid flows and nonlinear dynamics. What is yours in?
Manmade Global Warming is a bunko scam. Sorry. There's no data to support it! Do you trust Enron accounting? Do you trust mark-to-fantasy? The published measured climate record is no more accurate, and is continually revised to match what TPTB want the current fasionable model to say.
The Great Iron Lady (UK) released this pandora's box trying to break the coal mine unions in the late 70's. All dieties make one mistake, right?
What is a "climate denier?" Yes we have climate. No - Climate Change is a shakedown by corrupt people who are liars and want grant money. There is no accurate way to measure the sun's radiation over the earth so any attempt to claim global warming or climate change is nonsense based on junk science/lying/fraud.
Question current theories.
I am much beyond 25 and what is clear to me is that a lot of money is made off the "climate change" hysteria; reminds me of the bailouts for the banks.
You must seperate your sense of self and self-efficacy from your - or our - collective effect or non-effect upon the planet.
Stewardship? Yes.
Reduce-Reuse-Recycle? Yes.
Be manipulated by emotional scientists?
No thanks, I've seen the Bernank show...
Climate change, my ass!
It is blind, kneejerkedly pro-government, pro-Establishment (lies), pro-ongoing egregious fraud, pro-ubiquitous corruption and unsustainable insanity, PENSION MANAGERS who are going to cost their pension plans trillions! And yes, Leo, this means YOU!
Exactly.
What will happen when people are HUNGRY and broke and rioting? Carbon credits? Windmill farms? Sustainable assets?
BUZZER!
No.
Maybe agricultural lands, however, when things go bad the subsidies making the corn farmer in Nebraska rich will not fly under the radar like the past 20 years.
Leo, besides this, you must begin to introduce the idea into your fertile and compassionate mind that many Pension Fund Managers don't give a shit.
Thanks.
Anyone who invests based on what they think the weather is going to be like in 20 years deserves to have their eyeballs ripped out by whatever hybrid, derivative monstrosity Goldman Sachs dreams up for and sells to them.
Let's get down to the real question.
Is there any ill, real or imagined, which is *NOT* to be blamed on alleged anthropomorphic global warming?
It joins a long list of real and perceived ills that are money pilfering and wealth redistribution programs. I'll start it out, continue as you wish:
Cancer - smoking. That horse has been flogged pretty hard and is now near the end of it's lifecycle. It has been a profitible ride for Pharma, research and medicals.
New funds coming up! Climate Change
"schemes" must factor in climate change. the author is saying that schemes must factor in other schemes, in this case climate change fraud or lose monies on the schemes!!!!! question: which is the greater scheme.... climate change....the federal reserve.....or this nonsense from leo, always beating up on public pensions. his fixation is starting to appear as if he missed the boat some years back or maybe has a private program he feels is better...but no one is listening? a constant drum beat for nearly a year and half....hummmmmmm WHAT YOU SELLING LEO?????
It has been estimated that every man, woman and child will have to pay around 1000 to 1500 bucks pa to the GS run GCTS. So that's where the calculated 70 trillion dollar value is coming from, the usual place. Will we see food cards, that are valid only if you've paid your carbon tax?
Bet your life on it.....
lets hope so ....pensions need to go the way of the dinosaurs
+1 .....and they will with fuking loonies like these running these dinosaur pension plans.. i wouldn't give these delusional freaks a can of Cola to look after let alone my savings
No, but overreaction to the notion of anthropogenic climate change certainly could.
Well, it says "anticipated climate change policy" right up there in the top of the paper.
Mark my words, in 3-5 years or so the warmenistas are going to look really fucking retarded.
Very doubtful
We are on the verge of a new Ice Age not Global Warming
"In fact, I firmly believe that pensions stand to make very profitable investments in both private and public markets if they play this theme wisely."
In other words: "Never let a (perceived) crisis go to waste."
Just another way to bilk a gullible populace Leo?
+1
I like Tyler, William B, Turd and others but why do we have to get this daily childish shit from Leo and "george washington." It makes ZH like Huffington Post.