Around 85 per cent of UK pension providers have inadequate or poor climate plans in place, according to a new ranking from Make My Money Matter.
The Climate Action Report, by Profundo and Make My Money Matter, evaluates the climate initiatives of the UK’s top 20 pension providers, who collectively oversee £500 billion in assets for 15 million members.
Profundo examined the climate plans of 20 providers focusing on seven core indicators of climate action. These include commitment to a 1.5-degree pathway, carbon footprint disclosure, target setting, climate investments, fossil fuel phase-out, deforestation and land use, and portfolio stewardship. International standards were used to grade providers against each criterion.
The ranking finds serious shortcomings in each of their individual climate plans, even though almost all of them have made public commitments to reaching net zero emissions. It was noted that none of the suppliers was actively addressing climate change. Just three of the twenty companies, Legal & General, Aviva, and Nest, were deemed to have “adequate” policies in place.
Inadequate plans were found for 13 companies, including Standard Life, Prudential, and Royal London. Mercer, Hargreaves Lansdown, The People’s Pension, and SEI, the four worst performing firms, that together oversee the pensions of more than two million UK savers, received an average score of just one out of ten for climate action, earning them the designation of “poor” plans.
All providers are falling short on two of the most important aspects of climate action: the phase-out of fossil fuels and deforestation. Out of 20, 8 get a 0/10 for fossil fuels while 7 out of the 20 have a 0 for deforestation.
The results show that although most providers have established broad goals, they are inadequate substance, detail, and implementation. Make My Money Matter hopes that this ranking will help employers and savers make more environmentally friendly pension decisions, even if it does not offer financial advice. They urge providers to immediately expand investments in climate solutions, combat deforestation, and stop financing fossil fuels.
Make My Money Matter co-founder Richard Curtis says: “Climate leadership is not just important for the planet – it’s popular too. But the fact that 17 of the UK’s top 20 providers have inadequate or poor climate plans tells you all you need to know about how seriously the industry is taking this issue.
“The public will rightly be worried about these results, and we hope this ranking acts as an urgent wake up call for the pensions industry to up its game on climate change. In doing so they can help protect the planet and provide savers with pensions they can be proud of.”
Make My Money Matter CEO Tony Burdon says: “In a year where an average temperature rise of 1.5 c was exceeded for the first time, this report should concern everyone who cares about their pensions, or the planet.
“While there are pockets of progress which indicate what funds could achieve if they showed energy and ambition, overall leadership is scarce and progress slow. That’s why we now need all pension providers to recognise the findings of this report and invest in the skills and capacity needed to meet the climate crisis.”
Profundo director Jan Willem van Gelder says: “Given the disappointing results, I encourage UK pension providers to use the methodology of this study as a guide on what the public can expect of a robust climate action plan. Grand commitments to tackle climate change need to be followed by bold actions.”
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