FAQS ABOUT THE CLIMATE RISK ASSESSMENT LETTER

The Center for International Environmental Law (CIEL) has developed a Climate Risk Assessment Letter to help pension fund beneficiaries engage trustees on the management of climate-related financial risks. The guide argues that failing to monitor these risks—which include regulatory, technology, and litigation risks—may constitute a breach of fiduciary duty. It highlights that global financial institutions and some national funds, such as those in Norway and Ireland, are already reassessing or divesting from fossil fuel assets to protect long-term returns.

• The Climate Risk Assessment Letter is a tool for beneficiaries to initiate a dialogue with pension fund trustees to determine if they are meeting their fiduciary duties to monitor and manage climate-related financial risk, and it can serve as 'constructive legal notice' to trustees who have not yet addressed these risks.
• Climate-related financial risk is defined as the potential for significant financial impacts on investments resulting from climate change and the transition to a low-carbon economy, driven by the 'market signal' of the 2015 Paris Agreement which indicated that the 'era of fossil fuels must and will end'.
• Current financial risks include regulatory, technology, and litigation risks that can immediately affect cash flows; experts from Mercer Investments conclude that climate change will 'inevitably have an impact on investment returns', particularly at the sector level.
• Significant global divestment from fossil fuels is underway, with institutions in over 70 countries controlling more than $6.24 trillion in assets committing to divest. Specific examples include the Republic of Ireland's divestment of the Ireland Strategic Investment fund from fossil fuels in July 2018, and the Norwegian Central Bank's 2015 decision to sell coal mining and coal-dependent utility investments.

APA

Center for International Environmental Law (n.d.). FAQS ABOUT THE CLIMATE RISK ASSESSMENT LETTER. https://www.ciel.org/wp-content/uploads/2018/09/PENSIONS.FAQ_.LETTER.pdf

Chicago

Center for International Environmental Law. FAQS ABOUT THE CLIMATE RISK ASSESSMENT LETTER. n.d. https://www.ciel.org/wp-content/uploads/2018/09/PENSIONS.FAQ_.LETTER.pdf.

Wikipedia

{{cite report |author=Center for International Environmental Law |title=FAQS ABOUT THE CLIMATE RISK ASSESSMENT LETTER |url=https://www.ciel.org/wp-content/uploads/2018/09/PENSIONS.FAQ_.LETTER.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centerforinternationalenvironmentallawndfaqs, author = {{Center for International Environmental Law}}, title = {{FAQS ABOUT THE CLIMATE RISK ASSESSMENT LETTER}}, institution = {Center for International Environmental Law}, url = {https://www.ciel.org/wp-content/uploads/2018/09/PENSIONS.FAQ_.LETTER.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }