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Protecting pensions and planet: how pension savings are funding climate change
Submitted by India Keable-Elliot on Fri, 04/19/2013 - 08:00
We all know that pensions matter for our future financial well being. But what I didn't know until recently is that they matter for so much more; in fact, our pension savings are partly funding climate change.
It's easy to forget that when we put money into our pensions, it doesn't just sit in that account, gathering dust. Pension funds take that money and they invest it, and at the moment, most of them are heavily invested in fossil fuel companies.
Fossil fuel companies are an attractive investment for pension funds because of their high market valuation. This valuation is partly based on their oil, gas and coal ‘reserves', which they intend to develop in the future.
But here's the problem; according to analysis from the Carbon Tracker Initiative, only 20% of these reserves can be developed and used if we are to limit climate change to 2 degrees.
That's the limit committed to by 2010's Cancun Agreement on emissions reduction between 193 governments, including our own. The previous year, leading climate scientists said that in order to have a 1 in 5 chance of achieving a 2 degree world, carbon emissions must not exceed 886 billion tonnes of CO2 between 2000 and 2050. But if all of the unburned reserves of fossil fuels are used, the potential emissions would be 4 to 5 times over this carbon budget. So, if we don't want to cause catastrophic and irreversible damage to the environment, then it's clear; we can't use all of those reserves.
The fatally flawed assumption that all reserves can be used means that the value placed on fossil fuel companies is misplaced. Once this ‘unburnable carbon' is factored in, the value of these companies will plummet - and so will the value of our pensions.
We need to act now if we want to protect our savings and our planet. Pension funds have huge amounts of money to invest - money that we, the savers, give them for safekeeping until retirement. Where they choose to put their money has real consequences and that's why ShareAction has launched a new online email action at www.shareaction.org/carbonbubble to ask pension funds what they're doing to factor in climate change.
We need pensions that are fit for the future, so we're starting to build a community of people who are willing to challenge their pension fund about where they're putting their investments, and put pressure on them to act more responsibly. If you're interested in being a part of this vital movement, please drop us a line at [email protected]. Our pension funds are investing in companies whose behaviour is not only killing our planet, but killing our chances of a comfortable retirement. It's time we did something about it.