UK pensions have been given a green boost through new measures
which will drive forward ambitions to tackle climate risk.
These will require pension schemes to measure and publish how
their investments support the Paris Agreement climate goal of
limiting global warming to 1.5 degrees Celsius above
pre-industrial levels.
For the first time, pension savers will be able to see the impact
of their investments and better understand how climate risks are
being considered and mitigated, via climate risk reports
published by their pension scheme.
Together with existing climate regulations, the new measures will
mean from October this year more than 80% of UK pension scheme
members will be invested in pension schemes subject to these new
rules.
This is helping pave the way for greener pensions amid an
economic transition to net zero that will create the opportunity
to invest in green businesses, support jobs for the future, and
ultimately help grow a stronger and more sustainable economy.
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.
The measures are part of a consultation response published on 17
June 2022 as the Secretary of State visited Abbey View Produce in
Bury St Edmunds. Developed with financial backing from UK pension
funds managed by Greencoat Capital, the greenhouse is a world
first low carbon heating and greenhouse facility – demonstrating
the power of pensions and their role in net zero.
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.
The publication comes ahead of a 3-week ‘Green Nudge’ trial which
will see pension scheme members encouraged to learn more about
making greener pension choices.
In recent years, the DWP has also opened
doors to a wider range of investments – known as illiquid
investments – for occupational pension schemes, making it easier
for them to invest in projects that will help move the dial
towards a carbon free economy, including infrastructure projects.
Read the full consultation response Climate and investment
reporting: setting expectations and empowering savers
