Laura Hillis
Managing Director, Responsible Investment at the Church of England Pensions Board
As climate change increasingly intersects with nature loss, geopolitical uncertainty and economic resilience, investors are being challenged to take a broader view of risk and opportunity. In this Member Insight, Laura Hillis, Managing Director, Responsible Investment from the Church of England Pensions Board, reflects on why collaboration, adaptation and a whole-system perspective will be critical to delivering long-term value for beneficiaries and the wider economy.
As a pension fund managing £3.5 billion on behalf of our members, we are acutely aware that climate change presents both material risks and significant opportunities for long-term investors. Our interest in climate ambition, however, extends beyond the boundaries of our own portfolio.
We want to see action across the investment industry as a whole – ultimately, climate change has implications not only for individual assets and beneficiaries, but for the stability and resilience of the global economy itself. For long-term investors, these are important considerations.
Ambition and implementation
One of the most valuable roles IIGCC has played over the past 25 years has been helping investors translate high-level climate ambitions into practical action. Through its frameworks, guidance and opportunities for peer learning, it has helped create a pathway from commitment to implementation.
Of note is the Net Zero Investment Framework (NZIF) – which I know most investors will call out. It has provided a credible and structured approach to portfolio alignment, target setting and stewardship, while helping us bring together the wide range of climate-related activities we undertake into a coherent overarching strategy. Importantly, its widespread adoption has enabled richer conversations with asset managers and helped us communicate our expectations more clearly and consistently.
The power of investor initiatives
Looking back, the development and widespread uptake of NZIF stands out as one of IIGCC's most significant achievements. In many ways, it helped move the industry conversation from whether investors should act on climate change to how they can do so in a credible, consistent and accountable way, while remaining aligned with fiduciary obligations and client mandates.
Climate Action 100+ has had a similarly important impact. As a longstanding participant, we have seen how engagement can help shape investor-company dialogue, deepen investor understanding of transition pathways and raise expectations across the market.
Investing for the 2070s
Climate-related risks and opportunities affect long-term investment outcomes across asset classes, making them highly relevant to investors. As a pension investor, this challenge is particularly acute because of the exceptionally long horizons over which we invest on behalf of our members.
Our youngest members will not reach retirement until the 2070s. That is a long timeframe over which to consider the macroeconomic, environmental and geopolitical forces shaping the world in which we invest today. We have a responsibility to grapple with that uncertainty, understand what it means for long-term financial outcomes and consider how best to respond.
Navigating a more complex environment
Climate change has systemic implications for economic and financial stability. This makes investor action on climate important not only for individual portfolios and beneficiaries, but also for the resilience of markets.
At the same time, the transition itself is becoming increasingly complex. Investors are navigating evolving regulation, shifting policy environments and differing regional approaches, while also confronting the growing interconnections between climate risk, nature loss, energy security, conflict and supply chain disruption.
This complexity makes IIGCC’s work more important than ever. IIGCC continues to play a vital role by providing practical guidance and helping investors understand how interconnected risks are evolving.
We know from experience that investor voices carry greater weight when we work together in pursuit of shared goals around economic stability, resilience and long-term value creation.
A whole-system perspective
Looking ahead, I believe the next phase of investor action will be defined by a shift from portfolio-level considerations towards real-world outcomes.
We are already seeing a growing recognition that climate, nature and social issues cannot be treated as separate challenges. At the Church of England Pensions Board, we have sought to reflect this through our focus on food systems, energy systems, mining and critical minerals, and conflict. These themes sit at the intersection of climate, nature, social and governance risks and demonstrate how interconnected systemic risks increasingly require a whole-system response.
Scaling adaptation and resilience
To date, much of the focus has rightly been on mitigation and supporting the transition to a lower-carbon economy. However, investors also need to prepare for the physical impacts of climate change and their consequences for economies, markets and communities.
As we continue to experience the effects of heat stress, water scarcity, food insecurity and pressures on health and wellbeing, it will become harder to ignore the economic implications of climate change across supply chains and investment portfolios.
This is why I see growing importance in tools such as IIGCC's Climate Resilience Investment Framework and PCRAM 2.0, which provide useful foundations for investors seeking to assess and respond to physical climate risks.
Over the coming decade, I expect resilience to become a much more prominent feature of investor activity, from policy advocacy supporting resilient housing, infrastructure and supply chains, to stewardship that helps companies prepare for climate shocks, and increased financing for adaptation solutions.
For investors with horizons measured in decades rather than years, building that resilience may prove just as important as supporting the transition itself.
This is part of our 25 years of IIGCC Member Insight series. To find out more about IIGCC’s 25th anniversary click here.