Only 3 in 10 major UK pension schemes have credible net-zero plans

The Make My Money Matter Campaign has released research concluding that 71% of the UK's largest pension schemes do not yet have credible plans for reaching net-zero - a proportion representing more than £2trn.

Only 3 in 10 major UK pension schemes have credible net-zero plans

Under the proposals, administering authorities would be required to calculate and act on the carbon footprints of their assets and funds

Published today (11 October), the research assessed the 100 pension schemes named as the UK’s largest by trade publication Professional Pensions.

Make My Money Matter searched for public materials from each scheme relating to net-zero commitments, including media coverage and participation in collaborative schemes such as the Net-Zero Asset Owner Alliance, Paris Aligned Investment Initiative Commitment and A4S Pension Chair Statement of Support. For a net-zero target to be deemed credible, Make My Money Matter sought out 1.5C-aligned interim targets, including commitments to cut emissions by at least 50% by 2030.

“A 2050 net-zero target in isolation is not sufficient,” the organisation stated.

Of the 100 schemes, 71 have not yet published targets meeting Make My Money Matter’s criteria. The organisation has acknowledged that some are likely still developing targets and supporting plans but is calling for accelerated action ahead of COP26.

Among the providers of schemes without robust net-zero targets are British Airways, Heathrow Airport, AstraZeneca, the BBC, the Bank of England, BP, BMW, E.ON, GSK, IBM, ITV, John Lewis Partnership, Jaguar, Nestle, Mars, Marks & Spencer, Shell, Siemens, Sainsbury’s, RWE, Rolls-Royce, United Utilities and Vodafone Group. Several of these schemes are provided by corporates with net-zero targets and plans for direct emissions or those generated by their supply chains. 

Make My Money Matter co-founder Richard Curtis said: “Over the past year, we’ve seen how powerful our pensions can be in tackling the climate crisis. With leading businesses committing to sustainable pensions, citizens using their pension power to green their investments, and robust net-zero commitments from progressive pension providers, the movement to Make Our Money Matter is growing every day.

“But this report highlights just how far we have to go. With almost three-quarters of leading pensions schemes not yet aligned with the goals of the Paris agreement, we have to act with urgency to make sure that the trillions in our pensions help tackle the climate crisis, not fuel the fire. We need pensions to be proud of. Our report shows that voluntary action alone is not enough and that’s why we want the UK Government to make net-zero mandatory for all schemes at COP26.” 

To Curtis’ latter point, there is currently no legal requirement for pension schemes or providers to draw up net-zero plans, even though the UK’s net-zero target for 2050 is legally binding for the Government.

The main climate-related component of the Pensions Bill is a new mandate requiring large pension schemes to disclose the climate-related risks posed to assets in their portfolios by the end of 2022, in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

Pension pledges

The report comes just days after the HSBC Bank UK Pension Scheme set a 2050 net-zero emissions goal, and an interrim target to halve emissions by 2030 from 2019 levels. 

Also last week, the £10.6bn Transport for London (TfL) pension fund, £4.5bn Avon Pension Fund, and Phoenix Group, which manages £250bn of investments, have all set interim ambitions to reduce financed emissions on the road to net-zero.

You can read edie’s full coverage of those announcements here.

Sarah George

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie