The OPSEU Pension Trust is setting out a climate change action plan, including eight areas of focus that aim to make the pension fund more resilient and agile in taking on the problem.
“Climate change is one of the most significant challenges facing us today,” said Hugh O’Reilly, president and chief executive officer of OPTrust, in a news release. “As investors in so many sectors around the world, we need to better understand its impact so we can protect our members’ interests.
“We don’t yet have the data or tools we need to determine whether, and if so to what extent, climate change poses a risk to our members’ pensions. We are committing to build climate change risk into our investment approach, starting now.”
The areas for action, which OPTrust plans to implement over the next five years, include:
- Continuing to drive for better disclosure of the information investors need to price carbon risk;
- Collaborating with peers, regulators and the companies it invests in to achieve meaningful change;
- Continuing to build awareness and alignment among investment professionals through education;
- Defining a clear baseline to measure the plan’s exposure to industries and geographies that are at higher risk for climate change impacts;
- Integrating an approach that considers the impact of climate risk on the fund and in its portfolio construction;
- Focusing on achieving greater disclosure within its portfolio of companies and incorporating climate change-related metrics in the evaluation of new investments;
- Driving improved performance on environmental, social and governance issues and advocating for certainty in the regulatory environment; and
- Continuing to publicly report its efforts in managing climate change risk.
Earlier this year, OPTrust released a report in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures. It covered issues related to governance, risk management, strategy, metrics and targets. The news release noted the pension fund’s climate change action plan builds on those commitments and aims to lead to a better understanding of the risks and opportunities the issue poses to its investments.
“The transition to a carbon-neutral economy will be increasingly disruptive,” said O’Reilly.
“As investors and as responsible stewards of our members’ capital, we have to be prepared to face these challenges. This is still near the beginning, but it is a critical step forward.”