Climate change transparency by European pension funds: Agency problems and contractual issues

Description

In contrast with standard impression management and legitimacy explanations of organisational behaviour towards socio-environmental accountability issues, stewardship theory implies that organisational managers instead care about societal wide issues concerning environmental accountability. European pension funds play an increasingly significant societal-wide stewardship role both by providing retirement income for ageing populations and in securing public policy targets related to the green transition through engaging in net zero investment policies and climate friendly risk management strategies. We examine the degree of alignment with the Task Force for Climate-Related Financial Disclosure (TCFD) disclosure recommendations in publicly available climate reports of a sample of fifty globally large European pension fund organisations that dominate the investment industries in four European countries, the UK, and three EU countries: Denmark, Netherlands, and Sweden. We develop a trusteeship theory of environmental accountability which takes account of how the contracting structure of these types of asset owner organisations is complicated both by the nature of decision rights and control and governance characteristics. We predict and find that the degree of public climate change transparency related to the extent of delegation of investment management and monitoring to outside professional organisations and the governance structure, the separation of ownership and control of non-occupational based pension funds. We conclude that a trustee theory explains how pension funds face special contractual, and agency features which influence public transparency about how they deal with climate change.

Period	6 Sept 2024
Event title	1st European Sustainability Accounting Research Conference
Event type	Conference
Conference number	1
Location	Aalborg, DenmarkShow on map