Why are so many investment experts so blind ? It has to be the way they are educated. (Funds fail to insulate against climate risk,FT, Monday November 5th.)
Only 5% of the UKs biggest corporate pension funds have a policy on climate change, according to research by Pinsent Masons in the FT. And the reason? Says Peter Uhlenbruch Asset Owners Disclosure Project
‘There may still be a conception among the global pension fund community that climate change is only about values, ethics or opinions and not about investment risk’.
If Uhlenbruch is right this is extraordinary if not shocking. All these people in the investment community have been so steeped in Modern Portfolio Theory, the Efficient Markets Hypothesis and similar witchcraft that they cannot see or feel anything outside their financial bubble! Strange indeed that we savers have entrusted our retirement savings to people so narrowly educated that they simply cannot understand the ingredients of wealth creation or the sources of risk.
That’s why we need stewardship so badly.
On the positive side, full credit to Department of Work and Pensions whose new rules will, from 2019, force pension funds which disregard long term risks from environmental, social and governance factors to justify why they think it is ok to ‘fly blind’. This government action directly reflects the arguments advanced by Tomorrows Company for the last 20 years!