Climate adaptation must be part of Mansion House Accord, says Cushon
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A new white paper by master trust Cushon and the University of Exeter is urging the pensions industry to put climate adaptation on the productive finance agenda.
As private markets investments by defined contribution schemes increase, Cushon and the University of Exeter said they want to see four improvements to how providers invest in unlisted assets, saying there should be:
decision-useful data on physical climate risks, including extreme events and tipping points;
a pipeline of adaptation projects that can meet DC requirements on scale, governance and value;
clearer government guidance and incentives to crowd in private capital; and
closer coordination between government, public finance institutions, schemes and asset managers.
Martin Logan, sustainability manager at WTW-owned Cushon, said funding infrastructure and assets that can cope with a changing climate can create long-term value for members and the UK economy.
“The investment case is becoming harder to ignore. Physical climate risks are already affecting UK assets, while the pipeline of pension-scale adaptation opportunities remains underdeveloped," Logan said.
Jesse Abrams, a senior impact fellow at Exeter, said: “Pension capital is well suited to long-term challenges, but the market needs clearer data, stronger project pipelines and policy support. The Mansion House Accord creates real momentum; now we should use it to make the UK economy both more productive and more resilient.”
The white paper argues that in addition to mitigation investments, the UK needs to prepare for increased impacts from climate hazards and invest in climate adaptation to reduce the potential impacts. It identifies resilient infrastructure, flood and heat protection, nature-based solutions and upgrades to existing assets as areas with potential.
Cushon agreed to an investment in natural capital in its Sustainable Investment Strategy in June last year, committing 2% to the Aviva Investors Carbon Removal Fund.
