The report on Pension System Greening was prepared for the World Bank’s Finance, Competitiveness and Innovation Practice. This report examined how pension systems are currently evolving and how they must continue to change in response to the most pressing environmental issues. The objective was to identify the main barriers that prevent pension assets from flowing into sustainable investment vehicles, whether these barriers arise from regulation or other incentives. Additionally, this report aimed to make the business case to pension regulators and pension fund managers that climate risks and opportunities are financially material. The Capstone team focused both on high income countries, given the significant absolute size of their pension assets, and low and middle income countries, given the considerable size of their pension assets relative to GDP.
This report consisted of three parts. First, a pension climate risk heatmap that showed which countries’ pension systems are most at risk from climate change. Second, a review of the regulatory landscape that showed which pension systems have the most comprehensive ESG regulation, and how that regulation compares to the level of climate risk that each country faces. Third, an analysis of a survey administered to pension supervisors that asks how regulators are approaching climate risk, and how the pension funds in their jurisdictions are responding