Climate protestors were once again at the Pensions and Lifetime Savings Association (PLSA) Investment Conference in Edinburgh, urging delegates to update risk assessment methodologies amid concerns that many are relying on “flawed” climate risk advice.

Protesting outside the Edinburgh International Conference Centre, the group attracted the attention of delegates with singing and a ‘Big Oil Funk’ dance, as well as a portrayal of a pension fund leader with his head in the sand being persuaded by actuaries and climate scientists to look up.

The protest, organised by Divest Lothian, Extinction Rebellion Scotland and Friends of the Earth Scotland, and supported by Protest in Harmony, comes after a report from the Institute and Faculty of Actuaries, in conjunction with climate scientists at the University of Exeter, found that climate change and nature-driven risks have been underestimated through flawed economic modelling and risk assessment processes.

The report warned that the planet is on a trajectory to catastrophic warming levels of > 2°C by 2050, leading to a possible 50 per cent contraction of the global economy within the lifetimes of current pension savers.

Given this, the protestors encouraged pension fund leaders to assess the ‘risk of ruin’ and how to prevent that.

In particular, the group urged pension fund leaders to conduct robust climate risk assessments, informed by the planetary solvency dashboard, divest from fossil fuel companies, and advocate with governments for policy change that accelerates the transition and prevents unmanageable risk.

Lifeguard and XR Edinburgh & Lothians representative, Alexander Forbes, said: “The warning from the actuaries, the risk experts, couldn’t be more stark. Risk management by pension funds is currently blind to systemic climate, nature, societal and economic risks.

“The lack of urgency within governments to make the sweeping policy changes necessary - and within the pension industry to demand that they do - can be directly attributed to the flawed economic modelling and risk assessment processes widely considered authoritative, that underestimate the risk.

“We urgently need the people managing our pension savings to boldly face these risks, be honest about the risks with pension savers and demand the government take immediate policy action to accelerate the energy transition and reduce emissions.”

Divest Lothian representative, Joan Forehand, added: “Pension fund managers have their heads in the sand when it comes to climate risk. They need to look at the evidence in front of them, which risk experts have hammered home. A robust approach to climate risk assessment would clearly show that investing in the fossil fuel industry is not in the interests of its members.

“Divestment by pension funds would be both economically wise, and would send a strong signal to governments that policies and subsidies favouring the fossil fuel industry must be rapidly removed.”

Commenting in response to the protest, however, PLSA director of policy and advocacy, Zoe Alexander, pointed out that nearly all savers will now be in a fund that has made a commitment to net zero.

She continued: “As the main representative for the UK's pension funds, we are committed to working with members to help them achieve their net zero goals, by seeking policy change where needed, encouraging collaboration across the sector, and being at the forefront of the considerations on how the finance sector can respond to the climate emergency.

“As professional investors with a fiduciary duty to grow and protect their members’ savings over very long horizons, pension schemes have a significant interest in ensuring that the companies they invest in are fully prepared for a lower carbon future.

“One of the most important ways they do this is by exercising their rights as shareholders and holding company directors to account on their climate strategies.”

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