A key challenge for Local Government Pension Scheme (LGPS) funds in aiming to reach net zero by 2050 is that the world is not on track to achieve this target, according to the head of sustainability insights and climate change strategy at investment company abrdn.
Speaking at the Pensions and Lifetime Savings Association local authority conference, Eva Cairns said that global carbon emissions increased by 6% in 2021.
She added: “The world is not on that net zero by 2050 trajectory. In an all-climate scenario analysis, we tried to look at what is the most likely outcome and that is a 2.4°C world, not a 1.5°C world.”
The target to limit temperature rise to 1.5°C target was originally set at COP15 in Paris and “kept alive” last year at COP26 in Glasgow. Cairns called for more commitment to the wider goals announced at COP26, which would help LGPS funds finance and set net-zero ambitions.
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Cairns added: “We need to see those promises translated into binding action. There is an optimistic scenario that if all the promises and pledges were updated and put into place, we would reach 1.8°C, but we have seen very little progress since COP26.”
Other challenges that LGPS funds face when financing net zero to produce a global impact are the data availability, portfolio alignment and ensuring a “just transition”.
“There is a whole crisis with the just transition, as you need to consider the social impacts and it [the transition] also needs to be interlinked with biodiversity and understanding the impact on nature. As you could achieve net zero to the detriment of both of those things,” Cairns said.
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