The EAPF’s new policy says that “Climate change presents a systemic risk to the ecological, societal and financial stability of every economy and country on the planet, with the potential to impact our members, employers and all our holdings in the portfolio” (p2).
It goes on to say that: “Selective risk-based disinvestment is appropriate but engagement for change is an essential component in order to move to a low carbon economy” (p2)
Moreover it commits to the following actions (see p6). “Working with our managers, we will:
This policy stops a bit short of the forceful stewardship guidelines – for example, what happens when a manager invests in a company that has not demonstrated its business strategy is aligned to a 2 degree world (i.e. the vast majority of companies today). Nevertheless, this is a major step forward by a pension fund. As such it is a great benchmark for all funds, but especially foundations that are concerned about climate change and or its impact (egg refugees, poverty, conflict, water scarcity etc.) and that have none of the constraints that this pension fund operates under.
And as other funds catch up, we hope the EAPF will again raise the bar.