UK pension funds given chance to fight climate change

New proposals from the UK Government will make it easier for workplace pension schemes to remove their holdings in projects which damage the environment.

Under the new regulations, trustees will have to provide an assessment of the sustainability of their decisions.

Collectively, the UK’s workplace pension schemes invest over £1.5 trillion on behalf of millions of people across the country. The rules, released this week from the Department for Work and Pensions, aim to tackle environmental threats, such as climate change, by giving members more say over where their money goes.

Esther McVey, Secretary of State for Work and Pensions said: “These new regulations will empower savers all over Britain, ensuring that their voices are heard when their savings are invested.”

“As we see the younger generation who care more about where their money is going, they are also increasingly questioning that their pensions are invested in a way that aligns with their values. This money can now be used to build a more sustainable, fairer and equal society for future generations,” she added.

While the ruling is still open to consultation, the move was warmly received from those campaigning for more responsible investment. The charity ShareAction said it was “delighted” that the government is taking “robust action” on sustainability and ethical spending.

“For too long, many pension schemes have disclosed vague, high-level statements on their approach to ESG factors, and failed to report on what, if anything, they were doing to protect members from the rising investment risks of issues such as climate change”, said Bethan Livesey, the charity’s head of policy.

It is hoped that the new changes will prompt pension funds to take environmental concerns seriously. A recent survey from the Environmental Audit Committee found that some of the largest funds in the country were ‘worryingly complacent’ when it came to climate change.