Sustainable pension investments are vital in overarching plans to push the UK to net-zero carbon emissions, Guy Opperman says.
Writing for The Times today (6 October), the pensions and financial inclusion minister said the UK had to "harness the financial muscle of pension portfolios" to achieve its aim of being net zero by 2050.
He said this was especially the case in the lead up to hosting the United Nations Climate Change Conference (COP26) in Glasgow, which will take place next year after being delayed due to the Covid-19 pandemic.
Opperman said he wanted innovative options for pension fund investment to help the nation achieve net-zero, including more green investment in wind, solar and hydrogen.
He noted the establishment of the Taskforce on Climate-related Financial Disclosures (TCFD) and the Richard Curtis-fronted Make My Money Matter green pensions campaign as vital steps forward so far.
Opperman said: "For too long, many of us saw saving for a pension as a problem for the distant future. Auto-enrolment has changed that.
He added: "With trillions in assets under management, our pensions can do so much more than we think. If we can unleash the productive power of our pension funds, they can be at the forefront of seizing sustainable opportunities by financing the green-tech and green-energy revolution we need."
The long-awaited Pension Schemes Bill, which Opperman expects to be in law by the end of 2020, will make pensions "safer, better and greener" through a crackdown on "unscrupulous pension bosses", more accessible pensions, and "more sustainable and ethical" investments.
The bill will also allow mandate schemes to adopt and report against the TCFD recommendations, which ask trustees to consider the risks of climate change as financially material within their members' investments.
"More people than ever before are thinking about how their pension is invested. Many people are now taking a personal interest in how their own savings can play their part in getting Britain to net zero," Opperman said.
He added: "Some people believe that the government should simply force pension trustees to divest from high-carbon stocks. I disagree. Simply selling these assets to others without the same environmental concerns is counterproductive and will do nothing to get Britain to net zero."
He concluded: "Collaboration is the best approach. The UK can and will lead the way both in terms of achieving net zero, but also in the provision of green tech and the financial know-how to get us there."
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