Obligations to consider climate risk in relation to the investments of the Shell Contributory Pension Fund

ClientEarth warns the Shell Contributory Pension Fund trustees that failing to strategically manage climate risk may breach their fiduciary duty to act in the best interests of members. The letter asserts that climate change is a material investment risk and provides evidence that fossil fuel assets, particularly coal, are highly exposed to financial losses. It highlights emerging market standards among OECD asset owners, including the use of TCFD frameworks and divestment policies. ClientEarth recommends specific actions: evaluating physical and transitional risks, reallocating capital away from coal and risky fossil fuels, and pursuing active stewardship to align portfolio companies with the Paris Agreement.

• Trustees of the Shell Contributory Pension Fund have a legal fiduciary duty to act in the best interests of members, which requires considering climate change as a "potentially material investment risk" and evaluating the exposure of both scheme assets and the scheme sponsor to such risks.
• Fossil fuel and carbon-intensive assets face significant financial risks; specifically, 54% of coal power assets in the EU already have negative cash flow, a figure expected to reach 97% by 2030. Additionally, operating costs for coal are projected to exceed those of onshore wind by 2024 and solar power by 2027.
• Climate-aware investing does not necessarily reduce returns or limit diversification. Analysis of the S&P 500 from 1926 to 2017 showed that excluding any of the 10 main market sectors had a "negligible" impact on performance, and MSCI low-carbon indices yielded returns slightly better than the benchmark MSCI ACWI index up to 2016.
• Market standards among OECD asset owners (excluding the US) are evolving toward more robust climate governance. A review of 30 asset owners found that 67% have divestment policies, and globally, investors representing USD 6 trillion in assets have committed to divesting from fossil fuels, with pension funds accounting for half of that amount.
• Current financial analysis often fails to price climate risk correctly because it relies on short-term forecasts (1 to 3 years), which do not capture long-term impacts on company valuations and cash flows.

APA

ClientEarth (2018). Obligations to consider climate risk in relation to the investments of the Shell Contributory Pension Fund. https://www.clientearth.org/media/dofeprrr/shell-contributory-pension-scheme-legal-letter-ce-en.pdf

Chicago

ClientEarth. Obligations to consider climate risk in relation to the investments of the Shell Contributory Pension Fund. 2018. https://www.clientearth.org/media/dofeprrr/shell-contributory-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 Shell Contributory Pension Fund |date=10 August 2018 |url=https://www.clientearth.org/media/dofeprrr/shell-contributory-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 Shell Contributory Pension Fund}}, publisher = {ClientEarth}, year = {2018}, month = aug, url = {https://www.clientearth.org/media/dofeprrr/shell-contributory-pension-scheme-legal-letter-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }