Current climate risk assessments on pension investments “may not be credible,” according to British Business Bank chief investment officer, Leandros Kalisperas.

Speaking at the Pensions and Lifetime Savings Association (PLSA) Investment Conference 2025, Kalisperas said that it was “fair to call out” inaccuracies in climate risk assessments but suggested “practical solutions” were needed to help manage fossil fuel investments.

“It is widely understood that current assessments may not be credible," he continued, "but the question is, what is better than what we have, and how can it be implemented?”

Kalisperas’ comments came after climate protestors gathered outside the Edinburgh International Conference Centre, urging delegates to update risk assessment methodologies, amid concerns that many rely on “flawed” climate risk advice.

The protesters highlighted a report from the Institute and Faculty of Actuaries, in conjunction with climate scientists at the University of Exeter, which found that climate change and nature-driven risks have been underestimated through flawed economic modelling and risk assessment processes.

However, while speaking at the conference, LCP investment partner, John Clements, argued that there was “very little” evidence that divesting from fossil fuel companies helps manage systemic risk.

“Immediately selling your holdings to another firm that may not share your values is not the solution,” he added.

Instead, Clements said that the best approach for pension schemes was to set well-thought-out expectations for fossil fuel companies, with a clear escalation pathway if they do not meet their requirements.

The suggested pathway begins with posing engagement questions, then voting at AGMs on the company’s progress, and formalising any requests through a shareholder resolution.

Finally, he said schemes should threaten divestment if the fossil fuel company fails to meet its targets.

Clements also stated that while the industry was willing to tackle climate risk, “more progress” was needed to cut carbon emissions.

In support of this claim, recent research from the PLSA found that the majority (65 per cent) of pension funds commit to net zero in place, while 22 per cent of the third who do not have one expect to adopt a commitment within five years.

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