Make My Money Matter, a people powered campaign founded by filmmaker Richard Curtis, has written to the largest UK DB pension schemes as part of its industry wide push to encourage the transition towards a net zero economy.
Many large DB schemes have yet to commit to robust net zero targets, including halving emissions this decade. Make My Money Matter hopes that remaining defined benefit schemes will follow the example of their peers, such as the GBP58 billion BT defined benefit pension scheme and commit to net zero ahead of COP26 in Glasgow this year.
The letter coincides with increasing support from major UK businesses and growing public demand for green pensions. More than 60 companies, including household names such as Tesco, IKEA, EY and Travis Perkins, have now signed up to the Green Pensions Charter, pledging to invest their pension more sustainably, while research from Make My Money Matter and Aviva has shown that greening your pension is 21x more effective at cutting your carbon footprint than going veggie, stopping flying and switching to a green energy provider combined.
Make My Money Matter asks schemes who commit to net zero to follow robust criteria:
• Align with Paris/IPCC: Portfolios should match the 1.5°C ambition of the Paris Climate Accord, including halving emissions before 2030 and reaching full net zero by 2050 at the absolute latest.
• Say no to Coal: Providers should ensure a rapid exit from all coal investments.
• Use your pension power: Trustees must actively engage with companies they own and use their voting power on shareholder resolutions at AGMs.
• Divest where necessary: Where engagement doesn’t work, providers should divest from high emission companies who don’t have credible net zero strategies or refuse to transition.
• Fund the future: Providers should proactively invest in climate solutions, such as renewable energy and green infrastructure, and support a just transition to consider the impact that the climate transition may have on jobs and livelihoods.
• Match best practice: Providers should draw on international practice frameworks, such as the Net Zero Asset Owners Alliance or the IIGCC when forming and delivering plans to reach net zero.
• Ambition to action: Finally, providers should start acting now, reporting annually on their progress to members and holding themselves to challenging five-year benchmarks.
Tony Burdon, CEO at Make My Money Matter, says: “After reaching out to DC master trusts last month, we are broadening our focus to include the DB sector, which accounts for the large majority of the UK’s GBP2.6 trillion pension industry. These schemes have extraordinary power to help tackle the climate crisis and protect savers’ investments, but many have yet to respond to growing demand for cleaner, greener pensions.
“To meet the 1.5-degree ambition of the Paris Climate Agreement and tackle the climate emergency, we need our finance industry to move fast. Pensions are a crucial part of this and, with GBP2.6 trillion circulating in the UK sector alone, it is vital that no stone is left unturned.
“This is why we need all DB schemes to use their enormous pension power to tackle the climate crisis, and urgently reduce emissions. We know that this approach is good for the planet, protects investments from climate risks and is in line with public demand. That’s why now is the moment for all pension schemes to commit to robust net zero targets, and ensure our pensions are building a world worth retiring into.”