3 June 2021 / Macro

Global leaders call for all pension funds to be net zero

By Natasha Turner

'With $47trn in pension funds globally this sector plays a major role'

Global leaders call for all pension funds to be net zero

A global summit of government and industry leaders this week called on all pension funds to commit to net zero.

Some 15 pension funds now signed up to net zero, including halving emissions in this decade, representing £400bn in assets and 25 million pension pots. But at a Make My Money Matter conference on 1 June, global leaders such as Nigel Topping, Fiona Reynolds, Amina Mohammed and Alok Sharma asked others to follow suit.

Attendees at the summit even supported government mandating of net-zero commitments, with 87% voting in favour during a poll.

“We need to see all pension funds step up and commit to net zero by COP26,” said Nigel Topping, the UK’s High Level Climate Action Champion for COP26.

Topping also referenced the Green Pensions Charter, launched in May by Make My Money Matter, which commits signatories to engaging with their pension funds, increasing the positive impact of their investments and committing to net zero by 2050 with halved emissions by 2030. So far 50 businesses and organisations have signed up.

“For me it’s clear that a green pension for each of those businesses is a logical step on their journey towards a zero-carbon future,” he said.

Principles for Responsible Investment CEO Fiona Reynolds added working together will be key. Referencing the Asset Owner Alliance, she said: “It’s simply not enough for pension funds to ask others to take action on climate change, they must act themselves by committing to net zero and setting out an action plan. Investors can be more effective about bringing about change if they work together.”

Also calling on the world’s pensions to make climate commitments UN Deputy Secretary-General Amina Mohammed brought the sustainable development goals (SDGs) into the discussion, warning that pensions must also ensure other areas of sustainability, such as lifting up women and girls. “We must call on everyone everywhere to be more courageous and ambitious to deliver the SDGs,” she said.

Bring in the SDGs

During the summit, former executive secretary of the United Nations Framework Convention on Climate Change Christina Figueres also spoke about progress since the Paris Agreement more than five years ago, making reference to five changes:

“First we are now much more aware of the negative impacts of climate. Second, we are much more aware of the urgency. Third, public expectation is much more out there, especially the expectation of youth. Fourth, we have much more understanding of the benefits of decarbonising our polluted global economy, including safer investments. Fifth, the rising commercial value of investments in clean technology.”

However, she said one thing has not changed and that is the “very simple but powerful fact that wherever finance goes so go emissions or so go emission reductions”.

“Since the Paris Agreement was signed the world has not done enough and today we find ourselves at a crunch point,” COP26 president Alok Sharma concluded.

“COP26 must be the moment that every country and every part of society embraces their responsibility to protect our precious planet. And that includes finance. With $47trn in pension funds globally this sector plays a major role.”

Following the summit, Make My Money Matter has written to 20 UK defined contribution pension providers, representing £175bn in assets under management, asking them to make net-zero commitments. These are:

Aegon
Standard Life 
Mercer 
The People’s Pension 
Prudential Dynamic Growth IV 
Royal London  RLP balanced life strategy 
LifeSight 
Hargreaves Lansdown Workplace SIPP 
Aon 
Now pensions 
TPT retirement solutions 
Atlas 
National pensions trust 
SEI 
Crystal/Evolve 
Creative 
Workers pension trust 
Options 
Ensign 
Lewis