A new survey by the Asset Owners Disclosure Project (AODP) has found that most of the world’s largest investment and pension funds are unprepared for climate change and lack climate risk strategies, but identified South Africa’s Government Employees Pension Fund (GEPF) as a “noteworthy exception”.

In the first global climate investment index, released on Tuesday, AODP executive director Julian Poulter said a large percentage of the funds reviewed have adopted a “head in the sand” approach towards climate change.

The independent not-for-profit organisation surveyed over 800 pension funds, 80 insurance companies, 50 sovereign wealth funds and 50 foundations/endowments, in 63 countries, with a collective value of $60-trillion under management.

Poulter said that the investment decisions made by these investors would be critical to a safe climate and future prosperity, but many did not have climate change or climate risk policies, and many of those that did had not aligned their investment decisions with the policies.

“A large proportion of funds appear to be doing nothing at all to specifically address climate change,” he noted, adding that some of the funds had failed to respond to the survey and no public information regarding efforts to manage climate change-related issues were available on many portfolios.

However, South Africa’s GEPF, which ranked second in the overall global index and was one of only two funds to receive an AAA rating, stood out.

“This fund has calculated its exposure to overstated fossil fuel reserve valuations via the balance sheets of its investee companies, which is exactly the kind of actions we would like to see other funds and asset owners around the world take,” Poulter said.

Thirty-seven of the world’s 1 000 largest asset owners were based in the Middle East and Africa (MEA). The United Arab Emirates (UAE) had nine funds, followed by South Africa with eight and Israel with four.

South Africa’s Sanlam group ranked second in MEA and, with a rating of C, achieved a ranking of 87 globally.

Dubai World, in the UAE, ranked third in the MEA region and reached a position of 163 worldwide, followed by Israel’s Menora Mivtachim Senior pension fund at fourth place within the MEA and 181 overall.

Two funds in the UAE, two in Kuwait and one each in Israel, Libya, Qatar, Algeria and Saudi Arabia, all tied with an overall ranking of 224 and were fifth in the region.

Australia’s Local Government Super, with just over $6-billion funds under its management, was listed as the number-one fund and the only other AAA-rated company.

Australia-based funds dominated the top ten rankings, with only two funds from Netherlands and one fund from Canada also securing top ten spots, with AA-ratings. No US-based funds ranked in the top ten.

“Asia Pacific was the worst performing region save for the Australian influence,” Poulter commented.

AODP board member and general-secretary of the International Trade Union Confederation Sharan Burrow stated: “As for the laggards, working people should expect more from the people who they have trusted with their retirement savings to manage the long term. These funds need to wake up to the scale of climate risk but also members need to start applying pressure to drive the change.