Standardising climate-related reporting could “considerably” slash the cash burden for pension schemes, the Work and Pensions Committee has said.
Calling on the UK to up its leadership on fossil fuel-investing pension funds ahead of COP26, the Committee has urged the Government to encourage other countries to make their local pension schemes disclose their climate-related financial risks.
“With pension investments unrestrained by borders, international agreement is going to be key if the potential for pension schemes to contribute to cutting carbon emissions is to be realised,” MP Stephen Timms, Chair of the Work and Pensions Committee, said.
“Hosting COP26 provides the UK with a unique opportunity to build an international consensus on reporting standards and stewardship and the Government must seize it with both hands.”
Pensions divesting in fossil fuel projects should be a “last resort”, the pensions body explained – unless the assets are really unable to reduce their climate change contribution.
With a small pool of green pensions to choose from, the Committee said the Government should continue to support the development of green gilts.