The minister for pensions and financial inclusion has called on pension funds to step up their environmental commitment, by ensuring they take account of climate change in their investment strategies.
Guy Opperman made these remarks in a statement today (26 October) as 30 of the UK's largest companies pledged to tackle climate change in support of the government's Green Great Britain Week.
He said: "Pension schemes, as the ultimate long-term investors, have a crucial role to play in giving their members a planet fit to live on and fit for the future.
"Green Great Britain Week has provided a timely reminder for trustees that savers are wanting oversight of where their money is invested.
"That’s why we’ve given pension schemes a duty to state how they take account of climate change and other environmental risks – and it’s why we’re putting power back in the hands of individuals, giving them the ability to see where their money is going."
In September, the Department for Work and Pensions (DWP) published new rules mandating pension schemes with more than 100 members to disclose the risks of their investments, including the ones arising from environmental, social and governance (ESG) considerations, by 1 October 2019.
With many big businesses – including HSBC, EDF Energy and John Lewis - throwing their weight behind green commitments for Green Week, there’s an opportunity for the pensions industry to also make its mark, the government said.
The DWP noted three local government pension schemes have already pledged to align their investment portfolios with the goals of the Paris climate agreement, while the National Employment Savings Trust (Nest), with more than seven million members, has said it will consider how physical impacts of climate change could affect investments it has made in its "climate aware" fund.
A recent survey conducted by Nest found 73 per cent of its savers thought it important their scheme considered the environment, society and corporate behaviour when investing their money.
The DWP said the topic was of increasing importance for savers, so trustees and personal pension providers should have "a clear policy on how they will respond to the economic challenges and opportunities presented by a rapidly changing climate".
Earlier this month, the Financial Conduct Authority (FCA) published plans to make sure providers of workplace personal pension schemes take the risk of climate change into account.