Pension Funds: Climate Change

Department for Environment, Food and Rural Affairs written question – answered on 3rd July 2015.

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Photo of Lord Harrison Lord Harrison Labour

To ask Her Majesty’s Government what assessment they have made of the possible impact of climate change on pensions funds; and whether they intend to invite the Prudential Regulation Authority to include this issue in its Climate Change Adaptation Report.

Photo of Lord Gardiner of Kimble Lord Gardiner of Kimble Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

The Climate Change Risk Assessment, published in 2012, identified the impact on investment funds from climate change. It found that impacts would be indirect but could be substantial and that it would be difficult to establish a link between impacts and financial performance. The assessment identified the increasing exposure of insurers due to flood risk.

As part of the current round of reporting under the Adaptation Reporting Power, the Prudential Regulation Authority (PRA) is focusing its report on the insurance sector and its role in addressing the increasing exposure of the sector to climate risks. It does not directly supervise pension funds.

The PRA’s report will inform our next national assessment of risk, due in 2017, and the National Adaptation Programme due around 2018.

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