REGULATORY ACTION ON THE FINANCIAL RISKS OF CLIMATE CHANGE

That this House notes the profound impact that climate change is having across the world; is concerned following the recent warning from the Governor of the Bank of England that climate change could have a catastrophic impact on the global financial system; welcomes the recent report by the UK Sustainable Investment and Finance Association and the Climate Change Collaboration which examines UK fund manager expectations of financial risks posed by international action on climate change to international oil companies (IOCs); is alarmed that 90 per cent of fund managers expect climate change to significantly impact the valuation of IOCs within two years; further notes that 41 per cent of investors still do not have a strategy for engaging with IOCs on climate change; notes that automatic enrolment requires all new savers to be enrolled into defined-contribution (DC) schemes; is further alarmed that oil and gas companies are the third most heavily weighted industry in a typical DC scheme; is alarmed that rules for DC schemes mean that the members bear all investment risks; agrees with the Green Finance Taskforce that clarification of investors fiduciary duties is essential to enable the UK financial system to respond in a timely way to climate risk; notes that while the Department for Work and Pensions has already said it is minded to introduce such clarification for trust­ based pension schemes, the Financial Conduct Authority (FCA) has yet to make a formal response; and urges the Government and the FCA to introduce new rules to ensure environmental, social and governance factors, as well as the financial risks stemming from climate change, are properly considered by all pension schemes.