We can put people power into pensions – and tackle climate change

Labour will seek to mobilise pension funds towards tackling climate change today. Our amendment to the pension schemes bill would be a watershed moment in the fight to protect our planet. With the heft of the UK’s pension funds behind us, we can make the UK a world leader in achieving the objectives of the Paris Agreement and take us much closer to achieving net zero.

We have already challenged the government to deliver a green economic recovery from the pandemic by bringing forward urgent investment to support the creation of at least 400,000 new jobs, including in the crucial manufacturing sector. Future generations will judge us by the choices we make today to support livelihoods and businesses, tackle the unemployment crisis, and face up to the realities of the climate emergency.

But just as a credible, jobs-rich green recovery requires coordinated action across government, achieving meaningful progress on climate demands change in every part of our economy. Pension funds are not always recognised for the colossal economic lever they are in this conversation. And I know for most the mention of the word ‘pension’ makes them glaze over – but bear with me.

The investment decisions taken by pensions are hugely powerful. They contain trillions of pounds of your money – money that can catalyse significant change when used responsibly. The commitments made last month by a coalition of Nordic Prime Ministers to scale up green finance through institutional investors like pension funds sets an ambitious benchmark that is being set for the UK ahead of next year’s COP26.

Labour’s amendment, supported by pension providers and climate campaigners alike, would ask pension funds to demonstrate how they’re helping us get to net zero emissions. In reality, that could mean billions of pounds divested away from fossil fuels and towards new clean technology creating thousands of jobs. It would also direct pension funds to use their activist power as shareholders in some of our biggest companies to push for higher environmental standards.

It is tough to see how the government can achieve its own climate goals while excluding trillions of pounds of British capital from those efforts. And pension funds themselves know they don’t exist in a vacuum.

As responsible investors, many of the biggest funds are already taking steps to mitigate climate risk, to protect the future investment of their members and the economy they rely upon. Aviva and the BT Pension Scheme already have net zero target investment policies, representing tens of billions of pounds between them.

Imagine the power of knowing that your pension contributions are not only funding a secure retirement, but the next clean technology, or a clean, green jobs recovery from this crisis. That is what this amendment could do – put people power into pensions. And we know that people support this – research by Aviva showed that 59% think is important that pension funds ensure their investments help tackle climate change.

The Conservatives talk a good game, but they refuse to take the action necessary to address the climate crisis. Labour will not allow the government to drag its feet on this issue. We urge the government to show it is committed to tackling the climate emergency and back our amendment.

Labour is ambitious for Britain. We can harness the opportunities for green growth if the government takes the right decisions now. The UK should be a world leader in developing the jobs, technologies and investment of the future. Today’s amendment would be a huge step towards that. This is our money – let’s put it to good use by mobilising pension funds to protect the planet and support the drive to net zero.