In November, heads of state, climate experts and campaigners will come together in Glasgow for the United Nations Climate Change Conference, the biggest summit ever hosted by the UK, to discuss, and commit to, ambitious climate targets and concrete steps to protect our planet.
International collaboration is essential, but the success of global action will comprise the sum total of those steps taken by individual nations.
The UK is committed to being a world leader in combating climate change; a leadership role underpinned by building back greener through action and innovation at home.
Our leadership is strengthened by strong allies abroad too. President Biden’s decisive action to re-enter the Paris Agreement on Climate Change only strengthens our position to build back greener from the coronavirus pandemic.
The Prime Minister’s Ten-point plan for a green industrial revolution last year laid out measures to scale up climate action to go further and faster towards a greener future, while boosting jobs and strengthening our economic adaptation and resilience.
We are taking necessary steps not just to reach net zero by 2050 domestically – and our new, ambitious target of reducing emissions by 68 per cent by 2030 will make great strides towards that goal – but to continue leading global action, knowing that we cannot self-isolate from climate change.
My ambition is for UK pensions to play a key role in this, which is why I’ve legislated to introduce a greener pensions system through the Pension Schemes Bill, which has completed its passage through Parliament and will shortly receive Royal Assent.
Climate change is a major systemic financial risk and threat to the long-term sustainability of UK private pensions.
\With almost £2 trillion in assets under management, all pension schemes are exposed to climate-related risks and I am committed to ensuring trustees do everything they can to limit this risk to savers’ future retirement income.
When our pension funds make sustainable and ethical investments, they play their part in helping Britain towards net-zero.
That is why, in August 2020, we consulted on proposals to require trustees of larger pension schemes to manage climate risk and to disclose how they are doing so publicly, by, for example, allowing savers to see the carbon footprint of their pension.
Acting now to manage risks to retirement incomes from climate change, and to take advantage of the opportunities presented by the low-carbon transition, will put schemes, and savers, in a stronger position for the future – protecting hard earned pension pots from the financial risks posed by a warmer, and more hostile, planet.
We are now launching our response and consulting on these regulations, which will require over 350 occupational pension schemes with assets in excess of £1bn to make public financial disclosures, in line with those recommended by the international industry-led Taskforce on Climate-related Financial Disclosures (TCFD).
The flow of information stimulated by this will help trustees to seek out sustainable and climate-friendly investment opportunities, contributing to the green energy revolution we will need for the transition to net zero.
Risk is the focus – but there is also huge potential for pension scheme trustees to seize green opportunities, and unleash the productive power of our pension funds as we build back better and greener.
We need a whole economy transition and better stewardship by pension schemes of high carbon companies.
Similar economic shockwaves to those brought about by the pandemic could become common for businesses in the coming decades if action on climate-risk is not taken. Our proactive measures will help protect the pensions industry, and most importantly pension savers, from this financial instability.
Our proposals provide the tools to pave the way for a greener, more sustainable future for pensions. Savers, and our planet, deserve nothing less.