UK pensions to disclose climate alignment measures 

June 23, 2022

Hopes that the measures will pave the way forward for greener pensions

UK pensions will soon be made to disclose information about how their investments align with climate targets, following new regulations from the UK’s Department for Work and Pensions. 

Under the new regulation, pensions schemes based in the UK must measure and publish how their investments support the Paris Agreement climate goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels. 

Read Minerva's original article covering the Department of Work and Pensions Proposed Changes:

https://www.old.manifest.co.uk/uk-pensions-regulator-launches-consultation-on-climate-regulation/

The measures are expected to be introduced in October 2022 and, together with existing regulations, will lead to more than 80% of UK pension scheme members being invested in schemes subject to the new rules.  

The DWP hopes that these regulations will help pave the way forward for greener pensions amid an economic transition to net zero emissions.  

It is also hoped that this will create opportunities to invest in green businesses, support jobs for the future, and grow a stronger and sustainable economy in the UK. 

Pension savers will also be capable of seeing the impact of their investments and will be able to better understand how climate risks are being both considered and mitigated via reports published by pension schemes. 

As well as this, the climate disclosure measures come ahead of a three week ‘Green Nudge’ trial encouraging pension scheme members to learn more about making greener choices. 

Thérèse Coffey, secretary of state for work and pensions, said: “We are making sure our pensions can be a superpower delivering prosperity for people – and the planet – by making changes to the rules about how they are managed. 

“We’re paving the way for greener pensions which can offer sustainable returns for members while accelerating our net zero ambition and supporting local jobs.” 

The measures are part of a consultation response published in June as Coffey visited Abbey View Produce in Bury St Edmunds.  

Developed with financial backing from UK pension funds managed by Greencoat Capital, the greenhouse is a world-first, low-carbon heating and greenhouse facility – demonstrating the influence pensions can hold in reaching net zero. 

James Samworth of Greencoat Capital said: “The greenhouses are a brilliant example of how pension funds can have a direct impact. Abbey View at Bury St. Edmunds are decarbonising UK horticulture, improving food security, and creating employment whilst delivering secure income for pensioners.  

“Renewable energy more broadly is a great asset class for pension funds, matching their liabilities with long-term, inflation linked returns.” 

Sign up for Minerva's introductory briefing to SDG alignment