Climate change is a systemic threat to the financial system and presents a material risk to the investment returns of long-term asset owners and their underlying superannuation members. Central banks and national financial regulators are increasingly warning of the financial risks of climate change.

Investors have a clear legal obligation to manage climate risks. In addition, financial regulators around the world are now requiring a proactive response from investors and companies to manage climate related financial risks in order to ensure financial stability.

Institutional investors are responding to climate risks in a range of ways. They are:

• integrating climate change considerations into investment practice
• increasing engagement with the world’s largest companies to implement business plans to thrive in a resilient, net zero emissions economy
• engaging with policymakers to deliver credible, investable and durable policy frameworks.