The Asset Owners Disclosure Project (AODP) has urged investors to act well beyond the EU 40% by 2030 emissions reduction commitment announced yesterday.

“Investors, particularly pension funds, must understand that the risks to their beneficiary’s portfolios go way beyond the risks that this EU commitment represents and they must start to hedge their portfolios now,” Julian Poulter, Executive Director of AODP said.

“Everyone knows that this is a political fudge but climate change and the associated risks to high carbon investments are not just exposed to legislated pro-active policy such as this.

“Asset Owners must review all climate risks in their portfolio including the rapid rise in low carbon innovation and the inevitable knee jerk reaction to worsening climate data that will occur well before 2030,” Mr Poulter said.

Earlier this week, the Institutional Investors Group on Climate Change (IIGCC) had suggested that investment in low carbon assets was at risk unless a target was implemented.

“Today’s signals are not the same as today’s risks and each day investors are pouring more and more into high carbon assets that will likely be stranded. Let the short term fund managers play their casino style games but stop gambling with people’s pensions.

“There is a great deal the funds can and must do to get their own house in order before they completely point the finger at policymakers,” Mr Poulter said.

The 2014 AODP Index released last month clearly showed which funds are leading the battle to minimize carbon risk for their beneficiaries but showed huge number of so called long term asset owners simply ignoring the problem.

“Which ever way asset owners decide to tilt their portfolios away from carbon is up to them, but even a child can see that they cannot rely on outdated investment models and the vagaries of a short term financial system to manage long term systemic risks – it’s simply amateur hour.

“What our 2014 (AODP) Global Climate Index makes clear is that the world has an investment system capable of driving the low carbon transition – If all the funds we surveyed had a triple AAA rating, we would be well advanced on meeting the global climate challenge upon us.

“This is without any input from politicians and policymakers,” Mr Poulter said.

The 2014 Global Climate Investment Index can be accessed here: www.AODProject.Net