These will require pension schemes to 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.
For the first time, pension savers will be able to see the impact of their investments and better understand how climate risks are being considered and mitigated, via climate risk reports published by their pension scheme.
Together with existing climate regulations, the new measures will mean from October this year more than 80% of UK pension scheme members will be invested in pension schemes subject to these new rules.
This is helping pave the way for greener pensions amid an economic transition to net zero that will create the opportunity to invest in green businesses, support jobs for the future, and ultimately help grow a stronger and more sustainable economy.
Secretary of State for Work and Pensions Thérèse Coffey 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 on 17 June 2022 as the Secretary of State 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 power of pensions and their role in 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.
The publication comes ahead of a 3-week ‘Green Nudge’ trial which will see pension scheme members encouraged to learn more about making greener pension choices.
In recent years, the DWP has also opened doors to a wider range of investments – known as illiquid investments – for occupational pension schemes, making it easier for them to invest in projects that will help move the dial towards a carbon free economy, including infrastructure projects.
Read the full consultation response Climate and investment reporting: setting expectations and empowering savers
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