Obligations to consider climate risk in relation to the investments of the Electricity Supply Pension Scheme

ClientEarth warns the Electricity Supply Pension Scheme trustees that failing to manage climate-related financial risks may constitute a breach of fiduciary duty. The letter highlights that many of the scheme's group trustees currently lack explicit climate policies, often delegating ESG considerations to managers without formal determination of risk. ClientEarth provides evidence that fossil fuel assets, particularly coal, are highly exposed to transition and physical risks, while low-carbon indices have shown competitive or superior returns. It further notes a growing market standard among OECD asset owners toward divestment and robust climate governance. The document concludes with a detailed set of recommended actions, including reallocating capital away from coal and risky fossil fuels, adopting TCFD-aligned reporting, and pursuing active stewardship of portfolio companies.

• Responses from various group trustees within the Electricity Supply Pension Scheme show a lack of consistent or explicit climate change policies, with some merely expecting investment managers to address the issue or claiming a lack of objective evidence to assess financial risks.
• Pension trustees have a legal fiduciary duty to act in the best interests of members, which includes considering climate change as a material investment risk and evaluating the exposure of assets and scheme sponsors to such risks.
• Fossil fuel assets, especially coal, face significant financial risks; 54% of EU coal power assets already have negative cash flow, a figure expected to reach 97% by 2030, with operating costs for coal predicted to exceed those of onshore wind by 2024 and solar by 2027.

APA

ClientEarth (2018). Obligations to consider climate risk in relation to the investments of the Electricity Supply Pension Scheme. https://www.clientearth.org/media/ha0f4uit/electricity-supply-pension-scheme-legal-letter-ce-en.pdf

Chicago

ClientEarth. Obligations to consider climate risk in relation to the investments of the Electricity Supply Pension Scheme. 2018. https://www.clientearth.org/media/ha0f4uit/electricity-supply-pension-scheme-legal-letter-ce-en.pdf.

Wikipedia

{{cite press release |author=ClientEarth |title=Obligations to consider climate risk in relation to the investments of the Electricity Supply Pension Scheme |date=10 August 2018 |url=https://www.clientearth.org/media/ha0f4uit/electricity-supply-pension-scheme-legal-letter-ce-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{clientearth2018obligations, author = {{ClientEarth}}, title = {{Obligations to consider climate risk in relation to the investments of the Electricity Supply Pension Scheme}}, publisher = {ClientEarth}, year = {2018}, month = aug, url = {https://www.clientearth.org/media/ha0f4uit/electricity-supply-pension-scheme-legal-letter-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }