Following his letter to 50 large schemes demanding evidence of progress on responsible investment, the pensions and financial inclusion minister Guy Opperman sets out his expectations on environmental, social and governance issues.
A landmark moment in this country’s pension history and one that filled me with great pride. It was the culmination of months of hard work and will deliver for future generations. But I will not stop there.
It is over to the pensions industry to heed my clarion call to use their vast financial power to protect our environment and build a better future not only for their members, but for a whole generation who are deeply concerned about the planet
Regulations are only as powerful as the people who uphold them. Government is doing all it can to reinforce the legal duty on pension schemes to consider and act on the devastating dangers of climate change to their members – but the industry itself also needs to get behind this movement.
Many are. Pension schemes and investment managers are aware of the risks posed by climate change to their investments and ultimately their members’ payouts.
Time for concrete action
Last week I wrote to 50 of the largest pension schemes in this country, demanding that they provide in full their plans to implement and adhere to these vitally important regulations.
In that letter I called for pension schemes to spell out exactly how they are taking into account financially material considerations arising from environmental, social and governance matters, including climate change; to outline their policy on stewardship of their assets, in particular engagement and voting; and to clarify how they are taking their members’ views into account.
Climate change is an existential threat to the future of our planet, it requires leadership from government and action from every part of the financial system to change society and empower people to combat climate change themselves.
Millions of people in the UK are concerned about the impact of human activity on the climate. This government is acting, committing to phase out coal-fired power stations by 2025, ban sales of new petrol and diesel cars by 2040 and be carbon neutral by 2050, but new regulations we have introduced will compel pension funds to show they are investing to address the risks from climate change to their members.
Greening finance
The pensions industry and its investment power are an often overlooked part of our financial infrastructure. But the fact remains that pension schemes and investment managers have the power to invest trillions of pounds, more than £41.3tn worldwide.
These regulations will harness the UK’s share of that fund and make sure billions are invested to address not only the risks of climate change but also a range of social ills that reduce the sustainability of pension scheme investments and are doing real damage to our environment and society.
Now it is over to the pensions industry to heed my clarion call to use their vast financial power to protect our environment and build a better future not only for their members, but for a whole generation who are deeply concerned about the planet.
Guy Opperman is minister for pensions and financial inclusion
