UK pension trustees must resist being strong armed into sustainable investing, former Secretary of State for Housing, Communities and Local Government, Michael Gove has said.
Speaking at the Pensions UK Investment Conference 2026, Gove said it was the government’s responsibility to deliver on environmental, social and governance issues, while pension funds must focus solely on financial returns.
“The responsibility of the pensions sector and the pensions industry is to its members; your ultimate responsibility is to follow your fiduciary duty in order to ensure that they secure the best and most secure returns for their retirement,” Gove said.
He argued that pension schemes would “follow the money” and if ESG related investment were really the best option, that is where schemes would invest.
However, Caroline Lucas, former leader of The Green party, said that the UK’s GBP3 trillion in assets must be used to support climate-positive strategies.
“Unless human beings get an awful lot better at protecting and restoring the natural world upon which we depend for literally everything, then our own future on this one fragile and precious planet is brought seriously into doubt,” Lucas said.
She added: “Clearly and unequivocally, the global ecosystem collapse poses a severe, direct threat to UK national security and economic stability, likely leading to food shortages, conflict and significant economic shocks.”
Lucas pointed to research from The Institute and Faculty of Actuaries which warned that the current UK pension strategies “are steering us towards a three degrees Celsius increase in global warming which could reduce the world’s economy by half”.
Further, UK pension portfolios could face valuation declines of up to 30 per cent by 2050 under “plausible climate scenarios”.
“In other words, climate change and ecosystem collapse are a complex systemic financial risk,” she said.
Lucas called for UK pension funds to be mandated to invest with regard to climate change, arguing that relying on trustees to take the lead voluntarily is proving insufficient.
The UK’s [regulatory] approach to date has been governance heavy and disclosure centric. It has required trustees to measure emissions, to conduct scenarios and to publish reports. Those are valuable steps, but they don’t automatically redirect capital flows. Transparency, in other words, doesn’t guarantee transition.”
Gove was quick to dismiss Lucas’s demand for increased regulation, calling on schemes to reject mandation.
“You should specifically resist any attempt to say that your members’ money is safer if government mandates how you invest. Some will say that the pension sector enjoys certain tax advantages, but the reason for that is because people saving for later in life is a public good which relieves the pressure that might otherwise occur on the state if people find themselves in reduced or difficult circumstances when they are older. Those tax advantages are there for pro-central reasons, not for other reasons. Don’t allow government or any other pressure group to divert you doing your central duty.”
