The House of Lords has called for pension schemes to align their portfolios with the objectives of the Paris Climate Agreement.
During a debate on the pension schemes bill in the House of Lords yesterday (26 February), Baroness Hayman proposed that pension schemes should be required to disclose how they will align their investment strategies with the goals of the 2015 United Nations Paris Agreement on Climate Change.
This amendment would make the UK the first country in the world to align the actions of pension schemes with the Paris Agreement.
Baroness Hayman said: "The UK government needs to ensure that pension investment portfolios are aligned with, for example, the UK's emission reduction targets. Pension funds also need to act to protect their beneficiaries' savings from these financial risks.
"The requirements in these amendments would not necessarily involve disinvestment from any particular sector; it does not direct how the trustees must invest. It would involve trustees in assessing whether their assets in their portfolios have a clear strategy for, for example, aligning their business model with the UK emissions reduction timeline and taking appropriate action."
Aviva has also backed the proposed amendment to the pension schemes bill.
Head of savings and retirement Alistair McQueen said: "Private pensions hold £6trn of private wealth. This is the biggest source of private wealth in the UK. Private pensions can be a force for good [and] must play their part in tackling climate change. But bold action is needed.
"Aviva supports Baroness Hayman's call for the pension schemes bill to be bolder - by requiring alignment with the Paris Agreement."
He added: "UK private pensions have a unique opportunity to lead by example - for the good of our customers, and the good of our planet."
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