Climate change strategy
The Evangelical Lutheran Church of Finland is doing its part to help slow climate change. The Church Pension Fund wants to contribute to the work related to climate change, and the Pension Fund's climate change strategy was approved on 19 December 2016.
The goal of the Church Pension Fund is to consistently reduce the carbon footprint of its investment operations.
The Church Pension Fund’s Responsible Investment Work Group participated in the preparation of the strategy. This climate change strategy is valid until further notice and will be updated as necessary.
Climate change as a megatrend
Climate change is one of the megatrends of our time and, as such, plays a key role in the UN’s Sustainable Development Goals. Climate change is a global phenomenon that will have an unavoidable impact on the world’s societies and economies in the future. Climate change will have an initial and stronger impact on those people and environments that are already among the most vulnerable.
In order to slow climate change, humankind will have to reduce the generation of greenhouse gases in the atmosphere. At the Paris Climate Change Conference in 2015, the international community approved a new goal to limit global temperature rise to 1.5 degrees Celsius. Experts estimate that our attempts to limit the temperature rise to less than 2 degrees Celsius will mean that we will only be able to use one fifth of the world’s known fossil fuel reserves. This restriction has not yet been taken into consideration in the pricing of such reserves by companies and markets. If the so-called carbon bubble were to burst, it could significantly decrease the value of companies that produce fossil fuels.
In addition to the carbon bubble, another significant factor is carbon risk. Carbon risk comes from the idea that, as a result of attempts to slow global warming, a higher price or tax will need to be placed on the use of fossil energy sources worldwide. This would result in carbon-intensive companies facing increasing costs and investment needs in order to retain their competitiveness. Furthermore, the changing operational environment driven by environmentally-aware consumers, new technological solutions and increasing legislation may, in the future, result in a further price increase for the use of these reserves and a reduced demand for fossil energy sources. A large portion of the reserves may be left unused for economic reasons.
In terms of the intensity of its carbon dioxide emissions, coal is one of the worst fossil fuels. The world cannot retain its 2 degree warming scenario, if the amount of coal utilised in energy production remains at the current levels. In order to achieve the climate goals, it is important that the use of coal be reduced as soon as possible.