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Climate risks threaten up to 30% of pension returns

Heather Ng
Climate risks could significantly cut pension returns, with India and China sovereign debt among the hardest hit.
Climate risks threaten up to 30% of pension returns
Key Points
  • Ortec Finance warns that severe global warming could reduce long-term pension returns by up to 30% by 2050, framing climate change as an immediate material risk.
  • Sovereign bond valuations in India and China face steep declines of up to 53% and 18%, respectively, under high-warming scenarios as climate pressures drag on fiscal growth.
  • Institutional investors are urged to monitor insurance availability and geopolitical factors as early warning signals for broader economic and asset valuation stress.

Climate change is emerging as a material investment risk rather than a distant tail event for pension funds, with higher global temperatures threatening to drop long-term returns by as much as 30% and creating significant stress in sovereign debt markets in India and China, according to the latest Ortec Finance Global Pension Climate Risk Report.

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