Pension System Greening – Measuring and Monitoring Progress towards Sustainable Investing

The world is facing environmental challenges that must be addressed to ensure a desirable future for all. So far, 2,318 jurisdictions in 40 countries covering over one billion citizens declared a climate emergency. These environmental challenges require action today to transform our economy into a sustainable and green one. The estimation of how much money it would take to end global climate change ranges between $300 billion and $50 trillion over the next two decades. With USD 60 trillion in assets, pension funds play a critical role in the transition to a low-carbon climate resilient economy compatible with planetary boundaries.

World Bank Group, Finance, Competitiveness & Innovation has asked the Columbia Capstone team to measure and monitor the progress of leading pension funds around the world in allocating their assets and their commitment regarding greening investments. While pension funds adopted greener practices, there are still gaps and room for improvement for them to be really sustainable. Based on the existing framework developed by the spring 2020 Capstone team, this project aimed to track the greening progress of pension funds management by building up a greening benchmark tool for measuring the selective pension funds and conduct supporting case studies of pension system practices. The project focused on three points: the disclosure/ESG regulations; ESG integration strategies, selection criteria and best practices for managers; and pension funds progress analysis on changes in asset allocation and performance.