Date: December 11, 2018
To: The Alaska Permanent Fund Corporation Board of Trustees
From: Michael Tobin, 350Juneau Member
My name is Michael Tobin. I live in Juneau and am a shareholder of the Alaska Permanent Fund. I am testifying as a board member of 350 Juneau-Climate Action for Alaska. We are asking that the Permanent Fund Board perform a climate risk assessment on all the funds holdings.
You have heard my colleagues summarize our previous testimony and this years’ climate catastrophes. I want to stress that we are all in this together and that we, as shareholders, have a vested interest in you, the board, doing the right thing.
I spent my career as an emergency physician. Imagine yourself as an emergency doctor. There has been a disaster out there and you are about to be drawn into it. Would you like to have the best information about how many patients you are about to receive, when they might arrive and what injuries have been identified in the field? You might need to call in extra nurses and surgeons and open extra operating rooms. Or perhaps you would rather wing it and just deal with the situation when the patients arrive? I think we can agree that doing the right thing would be gathering information in a timely way before needing to act.
Some large institutional investors, many of whom are your peers, recognize we have a climate emergency, and have been acting in the face of climate change by performing climate risk assessments.
Climate related financial risk refers to a set of conditions caused by both the physical impacts of climate change and the regulatory, technological, and legal responses to the global effort to transition to a low carbon economy. It will likely impact assets in general, either depress or destroy the value of fossil fuel assets, and lead to declines in investment returns. Climate related financial risk assessment is a tool you should use to protect us. If you have not done such an assessment we ask that you do so.
The International Forum of Sovereign Wealth Funds, of which the Alaska Permanent Fund is a member, held an online seminar in March, 2017, “How Can Sovereign Wealth Funds Respond To Climate Change?” That document and the accompanying Mercer Report have numerous recommendations about methods used to perform a climate risk assessment, establish governance criteria, and improve performance. They emphasize establishing, and disclosing publicly, criteria and methods regarding how the organization identifies and manages climate risk. Our accompanying letter details responses by Vanguard, BlackRock, the Bank of England and others in this direction.
The effects of climate change are fast upon us. We request of you fiduciary responsibility in changing times. Incorporate periodic, climate risk assessment across all asset classes, including corporate bonds, not just public equities, into the governance of the Alaska Permanent Fund and make the results public.