Institutions for occupational retirement provision, or pension funds, are “significantly” exposed to the risk of a “disorderly” transition to a green economy, the European insurance supervisor (Eiopa) warned on Tuesday.
Pension funds are structures organized by companies to manage and prepare, at least in part, for the retirement of their employees, through capitalization.
In the scenario used by Eiopa, no new climate policy is put in place before 2030, thus making it necessary to redouble our efforts thereafter. Moreover, the contribution of a carbon capture technology, which is not widely accepted, is considered negligible.
According to the results of this test carried out with 187 players representing 65% of the assets held by the sector, a sudden transition would thus result on average in a drop in these assets of approximately 12.9%, i.e. a loss of 255 billion euros. euros.
Indeed, 6% of the shares held by pension funds and 10% of their corporate bonds are linked to high-carbon industries such as mining, electricity and gas, or land transport.
According to Eiopa’s scenario, the assets linked to these sectors could thus experience reductions in valuation ranging from 20 to 38%.
Retirement : save by paying less tax. 13 contracts compared
The heavy losses on the asset side clearly show the sector’s vulnerability to climate risks, especially with regard to investments in carbon-intensive industries, warned Petra Hielkema, the president of Eiopa, quoted in the press release.
However, the impacts on solvency and therefore on the ability of the sector to survive this crisis, seem manageable, she also specified, in particular because of their current significant reserves.
The European supervisor also points out that only 14% of the institutions questioned carry out their own climate resistance tests, which has enabled them to obtain better results than the others.