How Climate Change May Impact on Millennial Pension Funds

Given the wealth of evidence that exists to supports climate change, it is bizarre that it continues to be viewed with such scepticism by some. American President Donald Trump is a renowned climate change denier, for example, with his decision to withdraw from the Paris Climate Agreement capturing his approach in microcosm.

Even the Democratic Union (DU) party, which is now part of a coalition government after Theresa May’s disastrous election campaign, have shared their suspicion of climate change. Despite such cynicism, however, climate change is an undeniable threat, and one that has a more far-reaching impact than anyone could imagine.

The Truth About Climate Change and its Impact on Millennials

While some nations in the Western world appear to be regressing in their treatment of climate change, however, these represent exceptions to an overwhelming and indisputable rule. This is that we will see a gradual but inevitable shift to clean energy and a low carbon economy over the course of the next 50 years, with this process likely to accelerate during the next generational shift within society.

It is particularly important that Millennials grasp the importance of this transition, and the impact that it will have on their future pension funds. While this is not something that Millennials are likely to give much consideration to at present, particularly given the current macroeconomic trend for low real wage growth and soaring inflation, this shift will have a key bearing on how they shape their investment plans and portfolios to capitalise on the rise of clean energy (while also identifying new risks and opportunities).

If you need further evidence of this transition, you need not look beyond the current list of largest institutional investors across the globe. This is gradually being infiltrated by clean energy firms and smart technology providers, with Nest set to become increasingly dominant during the coming decade. This is a clear portent that highlights the future of the energy market and the profound change that is taking place in terms of how power is generated, while it also hints at the type of investment that will deliver sustainable returns over time.

The Bottom Line

In this respect, established wealth and retirement planners like Tilney will play an increasingly pivotal role in the years ahead. More specifically, they must help clients to prepare and adapt their portfolios in ways that address the demands of a low carbon economy. This involves the identification of potential risks and the leveraging of opportunity, along with the development of low-cost and scalable investment vehicles that eschew traditional power companies.

So while some nations continue to adopt a short-term approach that ignores the reality of climate change, this is very much opposed to logic and the opinion of most governments. It is therefore important to accept and embrace climate change, and ensure that you make financial plans which are based on the notion of a low-carbon economy.