High carbon investments threaten UK pensions

Published: 21 May 2012 at 10:27

Warning from Dr Aled Jones, Director of Anglia Ruskin’s Global Sustainability Institute

The pensions of British workers are being jeopardised by the City’s over reliance on high carbon investments, according to Dr Aled Jones, Director of Anglia Ruskin University’s Global Sustainability Institute (GSI).

Dr Jones will deliver his warning at the official launch of the GSI at Anglia Ruskin’s Chelmsford campus on Wednesday, 23 May.

“The depth and breadth of our collective financial exposure to high carbon, extractive and environmentally unsustainable investments could become a major problem which affects all of us,”

said Dr Jones, who chairs a working group for the Capital Markets Climate Initiative, a public-private initiative set up by Greg Barker MP, Minister at the UK Department for Energy and Climate Change.

“In both the FTSE 100 and the French CAC 40, two of the largest stock market indices in the EU, specialised oil and gas companies alone make up approximately 20% of market capitalisation.  To date investors have considered carbon constraints as something which will occur far in the future, and are therefore not material to asset valuation or portfolio management. This is no longer true.
“The European Union Energy Commissioner has suggested that the EU will fix a new and stronger 2030 carbon target – and potentially a new renewable energy target – in the next two years.  Globally, the Durban Climate Change conference in December 2011 set a deadline to finalise a new agreement to limit greenhouse gas emissions in all major economies by 2015.
“These imminent policy decisions will impact on the value of all high carbon investments by placing absolute limits to the use of fossil fuels inside the EU and globally.  As policy and technology over time reduce returns in high carbon areas while supporting low carbon ones, investing in high carbon sectors could result in stranded assets and poor returns, which could have a devastating effect on the pensions of the British public.”

The GSI plays a critical role in allying academic disciplines from across Anglia Ruskin together with business and governments.  Earlier this year Dr Jones joined others in writing to the Bank of England and the European Systemic Risk Board to highlight the potential risks posed to the finance sector by high carbon investments.

Since being formed in March 2011 the GSI has been involved in a number of important studies, including partnering credit ratings agency Standard & Poor’s to investigate the impact of water scarcity on the East of England and working with the British Antarctic Survey to research the communication of climate science.

Anglia Ruskin was also the first UK university to sign the Rio +20 Declaration of Higher Education Institutions ahead of next month’s UN Conference on Sustainable Development in Brazil.  This involves universities pledging to reduce their own environmental footprints as well as teaching and encouraging research on sustainable development issues.

The GSI launch begins at 5pm on Anglia Ruskin’s Chelmsford campus and will include talks by Dr Jones and Professor Michael Thorne, Anglia Ruskin’s Vice Chancellor.  The event will be followed by a free public lecture by photographer Mark Edwards, who will be discussing his Hard Rain:Whole Earth? exhibition which is on display at Anglia Ruskin from 19-29 May.