Part 1 of 4

Pensions in a Changing Climate

Part 1: Global Ranking, Key Findings & Regional Performance

This is the first segment of a four-part report assessing the global pensions sector’s response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The report uses new data to rank the world’s 100 largest global pension funds on their approach to climate-related risks and opportunities.

This first part will explore the performance of pension funds at an individual, national and regional level, and considers the influence of climate policy debate and action on geographic performance.

The following three parts will cover specific areas from the survey and follow the structure of the TCFD core recommendations – Governance & Communications (here), Strategy & Risk Management (here), and Metrics & Targets (here). The report will also review feedback from pension funds on harmonising green finance standards, barriers to low carbon investment, and challenges in implementing the TCFD framework. The following three parts of the report will be published between September and November 2018. To ensure you receive the following parts, please get in touch with Peter Uhlenbruch, AODP Investor Engagement Officer, on to be added to the AODP mailing list.


AAA Fjärde AP-Fonden (AP4) 1 AAA 0 Sweden EMEA
AAA Fonds de Réserve pour les Retraites (FRR) 2 AAA 0 France EMEA
AA New York State Common Retirement Fund (NYSCRF) 3 AAA -1 U.S. Americas
AA ABP 4 AAA -1 Netherlands EMEA
A Varma Mutual Pension Insurance Company 5 B 3 Finland EMEA
A Government Pension Fund Global (Norges Bank Investment Management) 6 BBB 1 Norway EMEA
A United Nations Joint Staff Pension Fund (UNJSPF) 7 AAA -2 U.S. Americas
A Tredje AP-Fonden (AP3) 8 AA -1 Sweden EMEA
A Ilmarinen Mutual Pension Insurance Company 9 AAA -2 Finland EMEA
BBB Pensioenfonds Zorg en Welzijn (PFZW) 10 AAA -3 Netherlands EMEA
BBB Bedrijfstakpensioenfonds voor de Bouwnijverheid (BPF Bouw) 11 CCC 3 Netherlands EMEA
BBB California Public Employees' Retirement System (CalPERS) 12 AA -2 U.S. Americas
BBB First State Super 13 AAA -3 Australia Asia Pacific
BBB Sjunde AP-Fonden (AP7) 14 AAA -3 Sweden EMEA
BBB Andra AP-Fonden (AP2) 15 AA -2 Sweden EMEA
BBB Ontario Teachers' Pension Plan 16 C 5 Canada Americas
BB ATP - Arbejdsmarkedets Tillaegspension 17 D 5 Denmark EMEA
BB AustralianSuper 18 AA -3 Australia Asia Pacific
BB PFA Pension 19 D 5 Denmark EMEA
BB Keva 20 D 5 Finland EMEA
BB California State Teachers' Retirement System (CalSTRS) 21 AA -3 U.S. Americas
BB Public Service Pension Plan 22 Not Rated n/a Canada Americas
BB Första AP-Fonden (AP1) 23 CCC 2 Sweden EMEA
B Quebec Government and Public Employees Retirement Plan (RREGOP) 24 Not Rated n/a Canada Americas
B Quebec Pension Plan 24 D 4 Canada Americas
B Pensioenfonds van de Metalektro (PME) 26 CCC 1 Netherlands EMEA
B Pensioenfonds Metaal & Techniek (PMT) 27 C 3 Netherlands EMEA
CCC Universities Superannuation Scheme 28 B -1 U.K. EMEA
CCC PensionDanmark 29 B -1 Denmark EMEA
CCC University of California Retirement System 30 A -4 U.S. Americas
CCC UniSuper 31 BBB -3 Australia Asia Pacific
CCC Canada Pension Plan Investment Board 32 C 2 Canada Americas
CC AMF Pension 33 BB -3 Sweden EMEA
CC Alecta 34 CCC -1 Sweden EMEA
CC New York City Employees' Retirement System (NYCERS) 34 BBB -4 U.S. Americas
C Swiss Federal Pension Fund PUBLICA 36 C 0 Switzerland EMEA
C Government Pension Investment Fund 37 D 1 Japan Asia Pacific
D Railways Pension Scheme 38 C -1 U.K. EMEA
D Los Angeles County Employees Retirement Association (LACERA) 39 D 0 U.S. Americas
D Maryland State Retirement and Pension System 40 D 0 U.S. Americas
D Future Fund 41 D 0 Australia Asia Pacific
D Minnesota State Board of Investment 42 X 1 U.S. Americas
D B.C. Municipal Pension Plan 43 C -1 Canada Americas
D Washington State Investment Board 43 C -1 U.S. Americas
D Sampension 45 D 0 Denmark EMEA
D Pension Fund Association for Local Government Officials 46 D 0 Japan Asia Pacific
D Healthcare of Ontario Pension Plan 47 D 0 Canada Americas
D North Carolina Retirement System 48 C -1 U.S. Americas
D Florida Retirement System 49 C -1 U.S. Americas
D Teacher Retirement System of Texas 49 C -1 U.S. Americas
D National Pension Service 51 D 0 South Korea Asia Pacific
D Colorado Public Employees' Retirement Association 52 D 0 U.S. Americas
D Employees' Provident Fund (KWSP) 52 D 0 Malaysia Asia Pacific
D Federation of National Public Service Personnel Mutual Aid Associations (KKR) 52 D 0 Japan Asia Pacific
D Ontario Municipal Employees Retirement System 52 D 0 Canada Americas
D Organization for Workers Retirement Allowance Mutual Aid 52 D 0 Japan Asia Pacific
D Retail Employees Superannuation Trust (REST) 52 D 0 Australia Asia Pacific
D Japan Mutual Aid Association of Public School Teachers 58 Not Rated n/a Japan Asia Pacific
D Government Employees Pension Fund (GEPF) 59 D 0 South Africa EMEA
D Massachusetts Pension Reserves Investment Trust Fund 60 D 0 U.S. Americas
D New York State Teachers' Retirement System 60 C -1 U.S. Americas
D Bayerische Versorgungskammer 62 D 0 Germany EMEA
D State of Wisconsin Investment Board 62 D 0 U.S. Americas
D Electricity Supply Pension Scheme 64 D 0 U.K. EMEA
D AFP Cuprum 64 D 0 Chile Americas
D Ohio Public Employees Retirement System 64 D 0 U.S. Americas
D QSuper 64 D 0 Australia Asia Pacific
D Previ 68 D 0 Brazil Americas
D Pension Fund Association 69 D 0 Japan Asia Pacific
X Afore XXI Banorte 70 X 0 Mexico Americas
X AFP Capital 70 X 0 Chile Americas
X AFP Habitat 70 D -1 Chile Americas
X AFP ProVida 70 D -1 Chile Americas
X Arizona State Retirement System 70 D -1 U.S. Americas
X Bureau of Labor Funds 70 D -1 Taiwan Asia Pacific
X Employees Provident Fund Organisation 70 X 0 India Asia Pacific
X Illinois Municipal Retirement Fund 70 X 0 U.S. Americas
X Illinois Teachers' Retirement System 70 X 0 U.S. Americas
X Indiana Public Retirement System (INPRS) 70 D -1 U.S. Americas
X Michigan Retirement 70 X 0 U.S. Americas
X National Council for Social Security Fund 70 X 0 China Asia Pacific
X National Federation Of Mutual Aid Associations For Municipal Personnel 70 Not Rated n/a Japan Asia Pacific
X National Pension Fund Association 70 D -1 Japan Asia Pacific
X National Wealth Fund 70 X 0 Russia EMEA
X Oregon Public Employees Retirement System 70 X 0 U.S. Americas
X Pennsylvania Public Schools Employees' Retirement System 70 D -1 U.S. Americas
X Promotion and Mutual Aid Corporation for Private Schools of Japan 70 Not Rated n/a Japan Asia Pacific
X Public Employees' Retirement System of Nevada 70 X 0 U.S. Americas
X Public Institution for Social Security 70 X 0 Kuwait EMEA
X Public School and Education Employee Retirement Systems of Missouri 70 X 0 U.S. Americas
X South Carolina Public Employee Benefit Authority Retirement Benefits 70 X 0 U.S. Americas
X State of New Jersey Division of Pensions and Benefits 70 X 0 U.S. Americas
X State Teachers Retirement System of Ohio 70 D -1 U.S. Americas
X Teachers' Retirement System of Georgia 70 X 0 U.S. Americas
X Tennessee Consolidated Retirement System 70 X 0 U.S. Americas
X The Retirement Systems of Alabama 70 X 0 U.S. Americas
X Thrift Savings Plan 70 X 0 U.S. Americas
X Utah Retirement Systems 70 Not Rated n/a U.S. Americas
X Virginia Retirement System 70 X 0 U.S. Americas
X Western Conference of Teamsters Pension Plan 70 X 0 U.S. Americas

*please note the 2018 ranking and rating reflects performance relative to 100 global pension funds, while the 2017 ranking reflects performance relative to the world’s largest 500 asset owners.


Key Findings

Finding 1: Leaders, Laggards, and most improved

1.1. AP4, Fonds de Réserve pour les Retraites (FRR), New York State Common Retirement Fund (NYSCRF), and ABP are all in the leadership group, rated either AAA or AA.

1.2. These funds all operate within different national jurisdictions and have different governance structures.

1.3. Keva, Quebec Pension Plan, ATP, PFA Pension, and Ontario Teachers’ Pension Plan showed the most significant progress relative to the 2017 ranking.

1.4. Over 60% of funds have little or no approach to climate change (D or X rated).

Finding 2: Pensions sector houses stronger leaders than the insurance sector, but also more laggards

2.1. Pensions sector has a higher proportion of funds that show climate leadership and innovation compared to insurance sector.

In May 2018, AODP published a survey of the world’s 80 largest insurers’ responses to climate change and its implications. The structure, wording, and focus of the questions were similar to those in the pensions sector assessment, allowing comparison between the findings from the two surveys.

When compared to the largest insurers, the 100 largest pension funds were found to house stronger examples of climate leadership. Over 1 in 4 pension funds received a AAA-B rating compared to only 1 in 6 insurers. A qualitative assessment of the leading pension funds against leading insurers also revealed that leading pension funds generally demonstrate more robust and innovative approaches in their climate responses. This is reflected in AODP’s recent Winning Climate Strategies report, which found the strongest and most innovative climate responses emerging from the pension funds sector.

2.2. However, the 100 largest global pension funds also house a higher proportion of X rated funds (which scored zero) relative to insurers.

The pensions sector is showing a greater number of laggards than the insurance sector, with around 1 in 3 pension funds assessed receiving an X rating, indicating no public information was available during the assessment period. This ratio is significantly higher than the AODP insurance sector assessment, where 1 in 7 funds received an X rating.

Figure 1: Proportion of laggards (rated X) in AODP pensions sector assessment against insurance sector assessment*

Figure 1: Proportion of laggards (rated X) in AODP pensions sector assessment against insurance sector assessment

*Outer ring shows insurance sector performance, inner ring shows pensions sector performance.

Finding 3: Size doesn’t matter when it comes to leading approaches

3.1. There is no correlation between the size of a fund and achieving a leading rating (AAA – B).

As the figure below illustrates, the highest rated pension funds in this assessment vary considerably by proprietary assets under management. This highlights that climate leadership is achievable for pension funds regardless of size, capabilities and resources. This finding is also reflected in our recent AODP leading practices report Winning Climate Strategies, which noted that 22 of the world’s leading asset owners vary remarkably by size, location and type (including pension funds, sovereign wealth funds, insurers and faith-based investors).

Figure 2: Pension funds’ size relative to rating

Figure 2: Pension funds’ size relative to rating

The columns on this chart show the AUM of each fund rated AAA to B, with the highest to lowest from left to right. As can be seen, there is little correlation between AUM and rank achieved. This conclusion is supported by a correlation coefficient of <0.2 between AUM and score across the whole data set, indicating no significant correlation.

Finding 4: Performance varies significantly across and within geographies

The map below shows the geographic coverage of the world’s 100 largest public pension funds. Around half of the 100 pension funds included within the survey are from the Americas region, followed by 29% from EMEA (Europe, Middle-East, and Africa) and 20% from Asia Pacific. The 100 funds have combined assets under management (AUM) of 11.3 trillion USD.

Figure 3: 100 largest pension funds geographic split across regions

Figure 3: 100 largest pension funds geographic split across regions

4.1. EMEA is the clear regional leader.

As illustrated in the figure below, EMEA (Europe, Middle East, and Africa) is the clear regional leader, with the largest number of leaders (rated AAA – B) and the fewest number of laggards (rated X). The Americas represents the next largest number of leaders, however the region also houses the most laggards. Asia Pacific represents the highest proportion of D rated laggards. This is a similar regional pattern to the AODP insurance sector ranking.

Figure 4: Ratings across regions*

Figure 4: Ratings across regions

* Size of bar shows proportion (%) of funds achieving the rating across the region. Numbers on bars represent the actual number of funds who achieved that rating in the region.

4.2. Sweden and the Netherlands are driving leadership from Europe.

A detailed analysis of the ratings shows that Northern European countries are driving leadership across Europe. This is in contrast to the relatively weak performance of the UK’s largest pension funds. As with the AODP insurance sector survey, Europe dominates the leaderboard with around 80% of AAA – A rated funds and over 50% of BBB – B rated funds based in Europe. The overall positive performance of European pension funds reflects growing efforts to reform regional regulation on climate risk, as well as mounting pressure from civil society, fostering greater awareness on the materiality of climate-related risks and opportunities for investors. For instance, the European Commission’s action plan on sustainable finance is driving progress on the development of a sustainable investment taxonomy and green finance product labels, as well as clarifying investors’ duties regarding sustainability.

Figure 5: Number of funds rated AAA-B by region and country (for EMEA)

Figure 5: Number of funds rated AAA-B by region and country (for EMEA)

Driving the strong regional performance of Europe are the Netherlands and Sweden, each housing five pension funds with a AAA-B rating, and reflecting the overall positive performance of the Nordic countries in this year’s assessment.

4.3. The largest pension funds in the UK largely lag behind European peers of a similar size.

Our research also shows that the UK’s largest pension funds are lagging behind their regional peers, as highlighted in Figure 6 below. This is disappointing in the context of smaller UK funds (which fall outside of the 100 largest funds) such as The Church Commissioners for England and Environment Agency Pension Fund, showing climate leadership (as featured in AODP’s recent Winning Climate Strategies Report). It is also disappointing when compared to the leadership shown by Aviva and Legal & General in AODP’s 2018 global insurance ranking.

Figure 6: Average percentage score of UK relative to rest of EMEA

Figure 6: Average percentage score of UK relative to rest of EMEA

4.4. New York and California perform well, despite weak performance across the majority of US pension funds.

Geographic differences also exist within countries. In the US, our data reveals a clear difference in approaches from pension funds in New York and California, which both house some of the highest rated pension funds, compared to the overall weak performance from other parts of the US. The table below shows the extent to which California and New York outperform the rest of the US.

Despite a lack of commitment from the US government on climate change, local political leadership from New York and California appears to have supported an environment where public pension funds are willing and able to take strong positions on these issues. California, for example, has passed a series of progressive climate regulations covering cap-and-trade programs and targets for clean energy, pollution and greenhouse gases, and their Governor Jerry Brown will host the Global Climate Action Summit in September 2018. New York is also pursuing a range of ambitious climate goals covering clean energy growth and reducing greenhouse gas emissions, with their Governor, Andrew Cuomo, demonstrating clear public support on climate issues.

Figure 7: Intra US regional differences

US state/ region
Funds rated AAA-C
Funds rated D – X
California 3 0
New York 3 1
Rest of US 0 30

4.5. Australia outperforms Asia in Asia Pacific region.

Within the Asia Pacific region, Australian pension funds showed stronger performance than their Asian peers. In Australia, 1 in 3 funds were rated BBB – B, while no other countries from Asia Pacific had funds that achieved higher than a C rating. Similarly, Australia housed no X rated funds whereas in the rest of Asia Pacific, over 40% of funds are X rated, as illustrated in Figure 8 below.

Figure 8: Ratings across Australia and rest of Asia Pacific*

Figure 8: Ratings across Australia and rest of Asia Pacific

*Size of bar shows proportion (%) of funds achieving the rating across the region. Numbers on bars represent the actual number of funds who achieved that rating in the region.

In Japan, while the AODP insurance survey recorded a notable improvement in the rating of Japanese insurers compared to 2017, no such trend was identified for the pensions sector. GPIF was the highest rated Japanese fund (receiving a C rating), while 90% of Japanese funds showed laggard performance receiving either a D or X rating, and showing no year on year improvement.

Background & Methodology

This is the third Asset Owners Disclosure Project (AODP) survey under the management of ShareAction. Our first ranking was published in May 2018 and covered the 80 largest global insurance companies. The second piece of research, Winning Climate Strategies, was based on 22 qualitative interviews with leading asset owners identifying their response to climate change and its implications. The methodology for this ranking of the largest global pension funds is published separately though it largely reflects the structure of the global insurance sector survey. The complete methodology can be downloaded using the button below. The key points from this methodology are:

  • The report assesses the 100 largest global public pension funds on their approach and response to climate change and its implications;
  • These pension funds were selected based on the size of assets under management (AUM);
  • Pension funds were invited to provide information through a questionnaire;
  • Pension funds which declined or did not respond had their questionnaire populated using public information. We then provided an opportunity for these funds to feedback and amend survey data;
  • The questionnaire was comprised of 27 questions covering proprietary investment activities; The questions are closely aligned with the Task Force on Climate-related Financial Disclosures (TCFD) core recommendations and includes sector-specific questions;
  • Pension funds were rated from AAA – D based on their questionnaire score. Where no information was available (either publicly or privately) funds given an X rating;
  • Rating bands were calculated based on the distribution of scores relative to sector peers in 2018.

Conclusions & Recommendations

It is our view that large global pension funds have a responsibility to manage their funds in the long-term interests of their members and beneficiaries, which includes building appropriate responses to climate change as a material investment risk. Our analysis shows that the vast majority of the world’s 100 largest pension funds are yet to have developed competent responses to climate change and its implications. This potentially leaves millions of the world’s savers facing a ‘climate lottery’ of whether their fund’s response is ‘fit for purpose’.

This is the first instalment of a four-part series outlining the results of the survey. We have highlighted a number of recommendations relevant for this section, with further recommendations to follow.


Reduce the climate lottery by making TCFD reporting mandatory

We believe that introduction of mandatory reporting in line with the TCFD recommendations will help reduce the climate risk lottery across the world’s largest pension funds. Regional pension supervisors need a clear mandate to drive up standards among regulated funds, with respect to climate-related risk management. It is our view that mandatory TCFD-aligned reporting requirements will help drive the development of stronger climate responses from the largest pension funds. In France, for example, Article 173 of the French Energy Transition Law requires the disclosure of climate-related risks by asset owners and asset managers. We believe it has helped influence the relatively strong performance of French insurers and pension funds in our recent survey of investors.


Mobilise fellow savers and beneficiaries

This survey has identified that over 60% of the world’s largest pension funds have little or no approach to climate change. Pension fund members and beneficiaries have the most to lose from the inaction of their schemes. Civil society organisations and pension savers themselves should mobilise and encourage better climate responses from their pension funds. They should demand an improved quality of communication around climate issues.


Align climate strategy with the long-term interests of your members

As has been highlighted by the TCFD recommendations, national regulatory bodies, and leading asset owners, the materiality of climate-related financial risks for all investors is indisputable. Pension funds, whose duty it is to invest in the long-term interests of their members, should be investing in line with a low carbon transition, and with internationally agreed climate goals. Despite this, the majority of funds surveyed have little or no response to climate change and its implications. We therefore urge pension funds, regardless of their size or location, to take the crucial next steps in taking action on climate change. AODP’s Winning Climate Strategies guide for asset owners includes ten key steps recommended by leading asset owners for improving their climate response, regardless of where they are on their climate strategy journey.


ShareAction gratefully acknowledges the financial support of the European Climate Foundation, Finance Dialogue, Hewlett Foundation, and the KR Foundation for this project. These foundations kindly supported this project, but the views expressed are those of ShareAction. More information is available on request.

We would further like to thank the panel of experts who gave their time to provide guidance to inform this research project, and particularly the development of the methodology and feedback during the review process.

We also acknowledge the efforts made and time given to supply information by individuals who were nominated to represent their companies in this assessment.

Report written and produced by: Pavel Kirjanas, Felix Nagrawala, Sam Hayward, Peter Uhlenbruch, Amy Metcalfe, and Toby Belsom of ShareAction.

Find out more

This is the first of four related publication we will make between September and November 2018 to draw attention to the role of global public pension funds in managing the risks and opportunities of climate change. Contact Peter Uhlenbruch, AODP Investor Engagement Officer, on if you would like to be notified about the next instalment of Pensions in a Changing Climate.