A member of Shell’s pension fund is ready to take it to the Pensions Ombudsman for maladministration – unless it can prove it is managing its climate-related risk.
The move comes after two years of unsatisfactory answers to his requests for proof the fund is acting on the threat that climate change poses to its investments and potentially to members’ pensions.
Christoph Harwood worked for Shell in the 1980s and 1990s and is entitled to a pension from the Shell Contributory Pension Fund (SCPF) when he retires.
He has exhausted the fund’s internal dispute resolution procedure, a precondition to making a complaint to the Pensions Ombudsman. He has now told the fund that he will take legal action should he fail to get a satisfactory answer to his request for documents and information on how the fund is managing climate risk.
ClientEarth is supporting Mr Harwood in his efforts.
This move comes less than two months after an Australian pension fund member launched a similar action against his pension fund.
Joanne Etherton, pensions lawyer at ClientEarth, said: “Every pension fund member has a right to know about material risks to their scheme. The documents Mr Harwood is asking for ought to show him how the fund is dealing with climate risk.”
The fund is doubly exposed to climate risk, as it holds fossil fuel investments and is sponsored by an oil and gas company.
Mr Harwood said: “Pension fund managers need to be changing their investment strategies as we move to a warmer and lower carbon world. Whilst the SCPF has acknowledged that climate change is one of the biggest risks it faces, it is unwilling to share with its members how it is managing this risk. All I am asking is for them to give us comfort that they are taking this seriously.”
The Financial Conduct Authority has acknowledged that climate change presents material risk for investors, equating it with core economic risks like liquidity, interest rates and inflation.
The Pensions Regulator has already issued guidance which identifies climate risk as a potentially material factor which trustees should consider in their investment strategies.
Etherton added: “The Ombudsman is likely to take a complaint like this one seriously. So it is in the pension fund’s interests to disclose the relevant documents now and prove that it is adequately addressing climate risk.”
A determination from the Pensions Ombudsman is (subject to appeal) final and binding on the parties. It is enforceable as if it were a judgment or order of the Court.