Overview

In November, the United Nations Climate Change Conference (COP26) was hosted in Glasgow. This event brought together world leaders to progress the goals of the Paris Agreement to limit global temperature rises to 1.5^oC and reduce carbon emissions. Reaching this target requires concerted policy action and is dependent on countries accelerating their plans to reach net zero emissions. Significant change is needed over the next decade.

The global scale of the challenges ahead can often feel insurmountable, but financial institutions will have a significant impact on whether or not we are successful, reflected in the “mobilise finance” goal of COP26.

As climate awareness continues to increase, change is inevitable and the financial impact will be huge and potentially rapid when it picks up momentum. It is critical that DB schemes find themselves on the right side of this change, especially as most are now closed to future accrual and working towards their end game - a setback to their finances in the next 10 years would put significant strain on employers and give very little time to repair the damage.

In this session, we discussed how successfully navigating the transition to a net zero global economy can be incorporated into schemes’ strategic thinking and end-game planning.

We focused on integrating climate awareness in fixed income portfolios, including some case studies of practical steps that schemes can take now. We ended with a Q&A session with Sumit Mehta, Head of Investment Solutions at Legal & General, who talks about climate aware investments from an insurer’s perspective, and why net zero matters for schemes targeting self-sufficiency or a buy-out.

You can find the answers to questions we didn't have time for in the below summary:

Q&A Summary