An overview of industry action on climate and our asks for the year ahead.

London, January 2023

Izzy Howden – Campaign Manager at Make My Money Matter

There is £3 trillion in UK pensions. This money – belonging to savers across the country – has extraordinary potential to drive real and long-term impact, both for the planet, and the people whose money is being invested. And more than ever, people want to make this money matter, with nearly half of pension holders likely to switch to a green pension if offered.  

This growing public engagement on the power of pensions is driving change within the industry, with over £1.3 trillion of UK pension money now in schemes committed to net zero with a halving of emissions before the end of the decade. This represents important progress, demonstrating growing recognition within the industry of the need to address climate risk and embrace the opportunities of the green industrial revolution. 

But targets alone are not enough. 

The United Nations recently declared that progress to limit global warming has been “woefully inadequate” and that there is “no credible pathway to 1.5C in place”. We are living in a climate emergency and need rapid transformation to limit its devastating impacts. And with £3 trillion invested on behalf of UK citizens – money designed to help build for our futures – the UK pensions industry has a critical role to play in tackling climate change.  

Despite this, last year, our first ever Climate Action Report showed that there are significant gaps in action from UK pensions – an industry responsible for financing 330m tonnes of carbon emissions each year.  Of the top 20 DC schemes, our findings show that none have explicit policies aiming to end fossil fuel expansion and only 20% have made public commitments on eliminating deforestation from their portfolios. It is clear that the UK’s biggest pension schemes must go much further to achieve real-world impact with pace and ambition.  

So, what matters now is action.  

Our pensions are crucial to tackling the climate crisis and having a future fit to retire into. That’s why this year we need UK pension providers to step up and use their power to address three crucial areas: 

  1. End fossil fuel expansion  

Our pension are heavy investors in fossil fuel companies, including many of those opening new oil and gas fields. But we know that, in order to reach Net Zero by 2050, there must be no new fossil fuel expansion. Our pensions must lead the way and call time on fossil fuel expansion by setting out red lines on any expansion by companies they invest in and clear next steps to hold them to account if action isn’t taken.  

  1. Cut deforestation from our pensions 

For every £10 we put into our pensions, £2 is linked to deforestation. Without us even realising it, our money is contributing to one of leading causes of the climate crisis. That’s why UK pension schemes must commit to tackling deforestation by beginning to assess the risk across their investments and publishing a clear policy on how this risk will be managed.  

  1. Invest in climate solutions 

Our pensions can be a force for good by investing in the climate solutions which help build a cleaner, greener world. Our pensions must set ambitious public targets to increase investments in, and urgently begin directing capital towards, such climate and nature solutions.  

By unlocking the power of the £3 trillion in our pension pots, the UK pensions industry can play a critical role in tackling the climate emergency, all while protecting member returns against the ever-increasing investment risks posed by the climate emergency. So now is the time for pension providers to back words with actions and ensure we all have pensions to be proud of. 

After all, what’s the point in retiring in a world on fire? 

Want to help? Join the movement today by contacting your pension scheme.