The reporting of climate and financial information could soon be mandatory, says Redington’s Robert Gardner.

Consulting agency Quantumrun curates timelines of future predictions in the technology, business, culture, science and health sectors. Here are some of their headline predictions for 2037:

  • Autonomous passenger drones as part of everyday life.

  • Traditional humans replaced with genetically modified babies.

  • Marrying humans with AI to create superior cyberbrains.

In 2037, the UN estimates the global population will be fast approaching 9bn. If we have not taken steps to prevent this, it is likely we will have crossed the threshold for a global 2 degree warming scenario.

Trustees are expected to assess the financial materiality of factors such as climate change, responsible business practices and corporate governance

There are a huge number of moving parts when predicting climate change outcomes – both in the modelling by scientists and the uncertainty surrounding policy decisions.

Yet despite this there is still a strengthening collective opinion that we need action to avoid or mitigate the worst implications of climate change. Donald Trump’s move to take the US out of the Paris Climate Agreement is undoubtedly a step backwards. Happily, this has strengthened the conviction of many others.

Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change, summed it up at a recent Grantham Institute event. Figueres commented that she had never seen one person shore up as much collective global resolve as Trump.

Regulatory pressure grows

Closer to home, we have also seen significant change. Investors are both aware of and responding to the threats and opportunities posed by global climate change. A couple of bodies that have released important work over the past few months are the Task Force on Climate-related Financial Disclosures and the Pensions Regulator.

The TCFD published its final framework in June. The framework supplies general guidance for all stakeholders of the financial sector. Their recommendations are optional at present, but serve as preparation for future global-scale policy that could make the reporting of climate and financial information mandatory. TCFD reported their findings to the G20 this July.

Environment Agency fund in surplus with ESG

Strong investment returns have lifted the Environment Agency Active Pension Fund into surplus, as it challenged the industry to collaborate to improve uptake of environmental, social and governance-related strategies.

Read more

The regulator continues to strengthen its guidance around environmental, social and governance criteria. This is clear in the new defined benefit investment guidance, published in March 2017. Trustees are expected to assess the financial materiality of factors such as climate change, responsible business practices and corporate governance. These factors must be accounted for in the development and implementation of a scheme’s investment strategy.

These are important steps. They demonstrate that integrating climate change awareness into the mainstream investor’s remit is not a ‘nice to have’.

By 2037, I expect the ways we invest for our future to be revolutionised by technology. I also anticipate every investor will consider the impact of climate change on their investments and to be aware of the contribution their portfolio makes to the low carbon economy.

The question is not whether investors will have climate high on their agenda, it is how quickly the industry develops the infrastructure and product offerings.

Robert Gardner is a co-founder of consultancy Redington

Topics