Pension schemes will be required for the first tome to publish how their investments support action to prevent climate change under new government regulations.
The new measures, which come into effect in October, will give around 80% of UK pension savers greater transparency about how their investments consider their climate impact. Schemes subject to the new rules will be required to publish a climate risk report, detailing how their investment contributes to Paris Agreement goals on climate change to limit global average temperature increases to 1.5C above pre-industrial levels.
Secretary of State for Work and Pensions Thérèse Coffey said:
“We are making sure our pensions can be a superpower delivering prosperity for people – and the planet – by making changes to the rules about how they are managed.
“We’re paving the way for greener pensions which can offer sustainable returns for members while accelerating our net zero ambition and supporting local jobs.”
It is hoped the move will encourage more pension funds to become greener and use their economy clout to support the transition to a net-zero future. The measures follow a consultation response published following a visit from the Secretary of State to a low-carbon heated greenhouse in Suffolk that has been backed by pension funds managed by Greencoat Capital.
James Samworth of Greencoat Capital said:
The greenhouses are a brilliant example of how pension funds can have a direct impact. Abbey View at Bury St. Edmunds are decarbonising UK horticulture, improving food security, and creating employment whilst delivering secure income for pensioners. Renewable energy more broadly is a great asset class for pension funds, matching their liabilities with long-term, inflation linked returns.
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