Climate change’s negative effects have expanded into U.K. pension fund investment returns, as they are expected to reduce by 30 percent, according to a Climate Risk Assessment report by Ortec Finance.
This research shows that transition risk is the most significant climate risk facing the investment portfolios of the top 30 U.K. pension funds. In the short-term, UK pension fund returns could be negatively impacted by 14 percent over the next five years. In the long-term, this percentage could increase to 30 percent by 2050.
By applying seven possible climate scenarios to a portfolio of 30 U.K. pension funds, Ortec Finance assessed the vulnerabilities of various asset classes. The findings show that real estate and equities are the two most vulnerable classes. Real estate is exposed to long-term physical risks, due to the locations where the pension funds hold their real estate. Equities are likely to face short-term transition risks if the impacts of climate
