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The role of pension funds in the low-carbon transition

Published in Rita Trigo Trindade, Rashid Bahar et Giulia Neri-Castrane. Vers les sommets du droit : Liber amicorum pour Henry Peter. Genève: Schulthess éditions romandes. 2019, p. 365-377
Abstract Creating a more sustainable development of the world requires urgent and multisectoral efforts. There is no doubt that the global financial markets and its actors have a crucial role to play in the transition to a low-carbon and resource-efficient global economy, after all they are funding providers for economic activities and growth. As a matter of fact, current levels of investment are insufficient to finance an environmentally-sustainable economic system. According to the Organization for Economic Co-operation and Development (OECD), US $ 6.3 trillion of investment in infrastructure is needed by 2030 to limit global warming below 2°C. The EU Commission estimates that the EU needs to reduce its greenhouse gas (GHG) emissions by 40% and to fill a yearly investment gap of almost EUR 180 billion in order to achieve its climate and energy goals by 2030. Such enormous sums cannot be borne by public finance alone. Reorienting private capital flows towards sustainable investments is an essential component of the transition towards a system that respects the planetary boundaries. In order to address effectively these challenges, we need a more profound understanding of the incentives of the key private finance actors, as well as a thorough revision of the regulatory system that governs them. The present chapter addresses the position of pension funds in the low-carbon transition, with a particular focus on European pension funds. It analyses the duties of those who manage pension funds, as those duties relate to investment decision-making. According to prevailing opinion, pension fund trustees are not only allowed, but obliged to consider relevant environmental, social and governance (ESG) factors in the investment policies and decision-making process, knowing that such issues must be seen as being material to financial returns and risks. Without dwelling on the specific investment practices, the paper aims essentially at exploring ways of reducing hurdles that investors face in the selection and integration of ESG issues and on tools allowing them to better asses ESG performances of portfolio companies.
Keywords InvestissementInternationalDéveloppement durableInstitution de prévoyanceDroit communautaireProtection du climat
ISBN: 978-3-7255-8749-0
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KARAMETAXAS, Xenia Elisa. The role of pension funds in the low-carbon transition. In: Rita Trigo Trindade, Rashid Bahar et Giulia Neri-Castrane (Ed.). Vers les sommets du droit : Liber amicorum pour Henry Peter. Genève : Schulthess éditions romandes, 2019. p. 365-377. https://archive-ouverte.unige.ch/unige:145418

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Deposited on : 2020-11-27

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