UK pension funds intensify climate action initiatives, however, confront scrutiny regarding continued investments in fossil fuel sectors
UK Master Trusts Criticised for Lack of Ambition in Climate Action
The latest Climate Action Report, produced by Make My Money Matter and Profundo, has highlighted concerns about the slow progress and insufficient action on fossil fuel exposure by several UK master trusts [1]. The report criticises these pension providers for their lethargic response to climate-related risks and transition planning.
While the report does not name specific master trusts, it points out their overall slow and insufficient response to climate-related risks and transition planning as the key issue [1]. Other sources suggest that this lack of urgency or ambition is in contrast to increasing regulatory and supervisory expectations for UK pension schemes and insurers to deliver credible, Paris-aligned transition plans by 2050 [2][4].
The report ranks Nest as number one in improving their policies on climate and nature, with some providers like Nest, Now, and Smart showing improvement in their climate and nature policies [3]. However, the average score for pension providers in their commitment to phasing out fossil fuels was only 2.9 out of 10 [5].
Seven of the 12 providers surveyed, including Aegon, Aviva, Fidelity International, Legal & General, Royal London, Standard Life, and Scottish Widows, continue to invest in ExxonMobil, a company with plans to increase its oil and gas output by 18% over the next five years [6].
Tony Burdon, CEO of Make My Money Matter, has criticised Standard Life and Royal London as "lethargic" in their response to climate and nature issues [7]. Jan Willem van Gelder, director of Profundo, argues that UK master trusts lag behind their European peers in fossil fuel divestment [8].
On the positive side, some of the largest Dutch pension funds (ABP, PMT, and PFZW) have already sold the bulk of their fossil fuel holdings [9]. The shift in focus this year is towards prioritising pension scheme members [10].
The report was produced in collaboration with the Dutch research organization Profundo and surveyed 12 of the largest DC master trusts by membership, rather than the 20 largest providers [11][12]. The International Energy Agency demonstrated in 2021 that no new oil and gas fields should be developed anywhere in the world [13].
References:
- Climate Action Report 2024
- The Guardian
- The Telegraph
- Pensions and Lifetime Savings Association
- Climate Action Report 2024
- Climate Action Report 2024
- The Telegraph
- Climate Action Report 2024
- Climate Action Report 2024
- Climate Action Report 2024
- Climate Action Report 2024
- The Telegraph
- International Energy Agency
Businesses in the financial sector, such as UK master trusts, are facing criticism for their slow progress and insufficient action on climate-related risks and transition planning, a crucial aspect of environmental-science. According to the Climate Action Report 2024, this lack of ambition in addressing climate-change is in stark contrast to rising regulatory expectations for credible, Paris-aligned transition plans by 2050.
