Pension schemes sign charter to demand climate change action

Jonathan Stapleton writes...

Some 76 trustees and chief investment officers from UK pension schemes with combined assets of £367bn have signed a pledge to push asset managers to take more action to help combat climate change.

The charter, created by networking site Mallowstreet, looks to get managers to ask ‘what is the impact on the climate?’ for each and every investment they make as well as demand that the carbon impact of investments is both measured and reported.

Trustees of some of the UK’s largest pension funds are represented among the signatories – including representatives from the Lloyds Banking Group, National Grid, Aviva, Nestle UK and Santander UK pension schemes.

The trustees have signed the charter in their personal capacities, and while this is not binding on the pension funds they represent, trustees expect a rapid sea change in the way their pension funds allocate assets.

Paul Trickett, who chairs the Railpen Investments Board as well as the trustee board at Santander UK Pension Scheme, said: “The time has come for asset owners to focus on this as a core part of their investment decision-making. Investment returns should not suffer in the long run, though they may do in the short term which means asset owners will need to balance conflicting priorities – but they are used to that.”

Mark Tennant, the chairman of the £8bn Centrica Common Investment Fund, added: “The problem we have with climate change is that everyone talks about it and everyone is deeply concerned, but very little is being done. The pensions industry as asset owners should be working with government to achieve the goal of net zero by 2050.”

The charter was created following a summit of pension fund trustees in June where it was decided that the climate emergency was so critical that action had to be taken immediately.

Mallowstreet co-founder and director Dawid Konotey-Ahulu explained: “The investment community has the power to make a meaningful difference in the fight against climate change, and it needs to use this power now.

“What the climate charter will achieve is that at every trustee meeting of pension funds someone will ask: ‘If we make this investment, what is the impact on the climate?’, putting the climate emergency at the top of the agenda. We want everyone to ask their pension fund provider what they are doing to combat climate change.”

Mallowstreet is now calling on the members of all pension schemes – including employees and those who have retired – to write to the trustees of their schemes demanding they sign up to the climate charter and take immediate action to save the environment.

The Climate Charter

The climate charter asks individuals to pledge to recommend to their boards and investment committees the following:

  1. To ask, “What is the impact on the climate?” for each and every investment that is proposed.
  2. To demand that the carbon impact of every investment is measured and reported on by our managers. We will work actively and collaboratively to develop complete carbon measurement standards
  3. To insist that each of our investment managers actively engage with corporate boards underlying our investments, so that every company develops and discloses both a complete measure of their carbon impact and a clear business plan to transition to a low carbon future
  4. To review, and ultimately recommend the termination of, any investment manager that fails to support and actively engage in stewarding the transition to a low carbon future.