Divestment is a “complete waste of time” as a response to climate change risk, said Robert Waugh, CIO at Royal Bank of Scotland group pension fund, with other pension fund executives largely sharing his sceptical stance.
RBS’s Waugh was the first to dismiss divestment during a panel discussion at the Pensions and Lifetime Savings Association (PLSA) investment conference in Edinburgh. Waugh said it was better to engage with companies or “provide capital to areas that are helping”.
The RBS fund is part of the ‘Aiming for A’ investor coalition that encourages companies to provide better information on their exposure to carbon risk. The coalition has lodged shareholder resolutions at Glencore, Anglo American and Rio Tinto.
As to the second aspect, Waugh said there were “loads” of investment opportunities allowing pension funds to fulfil their fiduciary duties of “enhancing return per unit of risk” while at the same time funnelling capital to new areas of the economy.
Windfarms, for example, are a “great investment for pension funds”, he said.
The RBS fund is also looking at solar and has a large sustainable timber portfolio, noted Waugh, with waste-to-energy also an interesting area.