Think climate change won't affect your pension? Think again

Michelle McGagh
oil and gas well profiled on...
oil and gas well profiled on...

If you put money into a pension each month and let your pension provider worry about the investment side there is a good chance your money will be invested in BP and Shell. And if you don't think that's a problem, you may want to read on.

A resolution has just been forward by investor group ShareAction to BP and Shell, calling for them to be more honest about just how climate change will impact their business and explain what it is the companies plan on doing about it.

Putting forward a resolution with over 100 backers (the Church of England and local authority pension schemes in the US and UK are just some who have put their weight behind it) means the companies have to vote on the measures put forward at their AGMs in a few months.

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If enough shareholders vote in favour of the resolutions, the companies have to put the resolutions into action.

You may be asking why this matter? Well, it matters because of a growing concern over 'stranded assets'. In a nutshell, there are fears that companies like BP and Shell will be slapped with impending global regulation to try and halt the destruction of climate change.

If this regulation comes into force, it's very likely that oil companies won't be able to dig anymore fossil fuel out of the ground – particularly if governments move to limit global warming to 2˚C, as agreed by governments at the UN Climate Change conference in 2010.

If oil companies can't dig oil out of the ground, what happens? The very real worry is that the value of the companies drop and the shares in those companies will be worthless, or 'stranded assets'.

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Where are you invested?

Even though pension savers may not have bought any BP or Shell shares themselves, it's highly likely their pension fund has as these shares are good dividend payers – meaning they pay a nice steady income.

The only way to find out if you are invested in these companies is to contact your pension fund and ask. And if you are, ask the pension fund whether it plans to support the ShareAction resolution to get BP and Shell to be open about the ticking timebomb they face.

Stranded assets could have a significant impact on pension returns and ultimately retirement income and while retirement concerns may be far down the line, the impact of climate change certainly isn't.

Read more:
Climate change may cost billions

Oxfam warns over future fuel crisis

Cashing in on renewable energy

Climate Change 2014: Mitigation of Climate Change
Climate Change 2014: Mitigation of Climate Change