UK pension schemes with ‘robust’ net-zero commitments pass £1trn mark

Campaign organisation Make My Money Matter, set up to push UK pension providers to go further on environmental sustainability, has announced that providers covering £1trn of assets have now made "credible" net-zero commitments.


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UK pension schemes with ‘robust’ net-zero commitments pass £1trn mark

Nest

The organisation was set up in summer 2020 by Comic Relief co-founder Richard Curtis and, at the time, the vast majority of the UK’s pension sector had not publicly committed to align with – or go further than – the UK’s 2050 net-zero target.

This week, it revealed that it has assessed the net-zero commitments of pension providers covering £1trn of assets and investments – more than one-third of the UK’s £2.7trn pension sector – and deemed their net-zero targets “robust”.

Make My Money’s definition of “robust” excludes net-zero targets that sit after 2050, and long-term targets not backed up with commitments and plans to halve emissions by 2030. The halving of emissions by 2030 was first recommended by the Intergovernmental Panel on Climate Change (IPCC) in 2018, in the first in-depth scientific report assessing the differences between the Paris Agreement’s 1.5C and 2C pathways.

The definition also covers schemes that have signed up to an alliance rather than making an individual commitment. Make My Money Matter’s approved alliances are the   A4S  Pension Fund Chair Net Zero Statement of Support, the Net-Zero Asset Owner Commitment and the Net-Zero Asset Owner Alliance. It is worth noting that the latter alliance came under fire at COP26, with green campaigners calling for a tightening of interim requirements.

Pension schemes with commitments meeting Make My Money Matter’s “robust” net-zero criteria include Nest, Aviva, Smart Pensions and Scottish Widows. The organisation has said that a groundswell of public awareness of where their money is being invested, in terms of sustainability, has played a key role in improving commitments across the sector.

Curtis called the meeting of the £1trn mark “an incredible milestone” and “a huge success for climate campaigners”.

However, he did urge caution, adding: “We have a pensions industry that enables a staggering 330 million tonnes of carbon to enter our atmosphere every year – equivalent to the UK’s annual carbon footprint – so urgent action is needed right now.

“That’s why this year our campaign will be working to ensure the entire UK pensions industry is aligned with robust net-zero, while eradicating other harmful practices from our pensions, such as deforestation. In doing so, we can help protect the planet, protect savers’ returns, and ensure our pensions are building a world worth retiring into.”

To Curtis’s point on deforestation, Global Canopy this month published an analysis of 150 of the world’s largest financial firms, finding that 93 do not have policies to prevent deforestation caused by the companies they invest in and lend to.

Furore over factory farming finance

In related news, NGOs Feedback and World Animal Protection have this week published an analysis of how local authorities across the UK are continuing to invest in factory farming, potentially against their own environmental commitments.

The analysis reveals that UK councils have, as of February 2021, got more than £238m of investments in the industrial livestock sector. This is despite the fact that three-quarters of UK councils had, at that point, declared a climate emergency, with most backing that declaration with a net-zero pledge.

Livestock is notably responsible for more than 14% of global annual emissions and, while regulation around anti-deforestation and animal welfare is considered robust in the UK, the same cannot be said for the industry globally. The IPCC has stated that agriculture has accounted for 23% of all human-caused emissions to date, and 75% if deforestation by area size. Notably, the companies most often supported by UK local authority pension funds are all multinational. The analysis names

Feedback and World Animal Protection are arguing that most UK councils can easily divest from the intensive farming sector, as the average pension fund has just 0.1% of its total pot invested there.

“Industrial livestock corporations are simply not compatible with a climate-safe future and like fossil fuels, have no place in the pension portfolio of a climate-conscious local authority,” said Feedback senior campaigner Martin Bowman.

“We’re calling on councils to divest their bonds and shares in these companies.”

The call to action comes during Veganuary – the global campaign encouraging participants to eat only vegan foods for 31 days, with a view that they will change their dietary habits in the long term. Veganuary announced this week that it has had more sign-ups for 2022 than in any previous year, with more than a week still left to go.

Sarah George

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