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

ClientEarth argues that the Tesco Pension Scheme trustees may be breaching their fiduciary duties by failing to identify and mitigate specific climate change risks. The letter asserts that climate risk is a material financial risk and provides evidence that fossil fuel assets, particularly coal, are highly exposed to losses. It further claims that low-carbon investing does not compromise returns and that market standards are shifting toward robust climate governance and divestment. ClientEarth recommends a series of actions, including reallocating capital away from coal and risky fossil fuels, adopting TCFD-aligned reporting, and implementing active stewardship policies to ensure portfolio resilience.

• Trustees have a legal obligation to act in the best interests of members, which includes considering climate change as a material investment risk for both the scheme's assets and its sponsor.
• 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.
• Climate-aware investing and the exclusion of high-carbon stocks do not negatively impact portfolio returns or diversification, with some low-carbon indices slightly outperforming the MSCI ACWI benchmark.
• Current financial analysis often fails to price climate risk correctly because it relies on short-term forecasts (1 to 3 years) and suffers from a lack of available corporate data.
• A review of 30 OECD asset owners (excluding the US) indicates that 67% have divestment policies and that many are adopting robust governance, such as carbon emission reduction targets and TCFD-aligned reporting.
• ClientEarth recommends that the scheme cease new investments in coal and risky fossil fuels, such as tar sands and arctic exploration, and shift passive investments to low-carbon indices.

APA

ClientEarth (2018). Obligations to consider climate risk in relation to the investments of the Tesco Pension Scheme. https://www.clientearth.org/media/p4vbxwol/tesco-pension-scheme-legal-letter-ce-en.pdf

Chicago

ClientEarth. Obligations to consider climate risk in relation to the investments of the Tesco Pension Scheme. 2018. https://www.clientearth.org/media/p4vbxwol/tesco-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 Tesco Pension Scheme |date=10 August 2018 |url=https://www.clientearth.org/media/p4vbxwol/tesco-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 Tesco Pension Scheme}}, publisher = {ClientEarth}, year = {2018}, month = aug, url = {https://www.clientearth.org/media/p4vbxwol/tesco-pension-scheme-legal-letter-ce-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }