Written evidence from Make My Money Matter (PSC0012)


In March 2021, the Minister for Pensions and Financial Inclusion announced that “world leading regulations” will come into force ahead of COP26, following the Government’s consultation, “Taking action on climate risk: improving governance and reporting by occupational pension schemes – response and consultation on regulations”, which ran from January to March 2021 Government response: Taking action on climate risk: improving governance and reporting by occupational pension schemes - GOV.UK (www.gov.uk)


Ahead of COP26 the Committee is seeking views on how the UK Government’s approach to pension scheme stewardship can inform—and should be informed by—approaches taken internationally.



Introduction to Make My Money Matter (MMMM)


Make My Money Matter (MMMM) is a people-powered campaign working for a world where we all know where our money goes, and where we can make sure it’s invested in a way that is aligned to our values in order to build a better future.


Our surveys, and those of others, show that people understand very little about their pensions and how they work, but consistently the majority of people want a sustainable pension, one that does not harm people and planet (March 2021 MMMM YouGov survey - Two thirds (61%) of pension holders say that they want their retirement savings to help fight climate change and over half (53%) explicitly say that they want their pension to do good for people and the planet. 80% of pension holders that we surveyed have never considered whether their pension could be contributing to climate change.)


We have previously welcomed the efforts that DWP is making to improve climate risk governance and reporting by occupational pension schemes. In order to tackle climate risks, meet member concerns and align pension funds with the UK government’s ambition on net zero, we have been calling on all UK pension funds to align their portfolios to the 1.5 degree pathway, requiring net zero emissions before 2050 and a halving of emissions before 2030. Increasingly, leading UK pension funds from Nest to Scottish Widows, BT to Brunel, and Aviva to Smart Pensions, are doing so. They are doing so because they see it as their fiduciary duty, while noting too that their members want action to tackle the climate emergency.


Effective stewardship by pension fund trustees is a crucial part of enabling the true power and potential of our pensions to come through.




Make My Money Matter welcomes government’s legal commitment to net zero, the recently announced increase in ambition, the government’s 10 point plan, the commitment to mandatory TCFD disclosure and the sustained efforts of government to increase reporting from pension funds on climate and wider ESG concerns.


However, despite the voluntary progress made by leading pension funds to a robust net zero, including halving emissions before 2030, we estimate only £420bn of assets under management, some 25m pension pots, will be aligned. This leaves almost £2.2tr of UK pension funds driving the climate emergency, including the potential of future events which will create catastrophic and irreversible tipping points. Urgent action is required. This includes:


  1. Mandatory alignment of UK pension funds, and the wider financial industry, to a  robust net zero, in line with government’s commitment and vision on net zero.
  2. More active and effective stewardship of assets in order to drive the transition to net zero.
  3. Greater transparency to members on pension fund alignment to net zero, wider ESG impacts, and greater consideration of member views and values.



Responses to questions posed


  1. How should pension schemes contribute to setting COP26 targets and helping to achieve the targets once agreed?




  1. What role should international standards have in supporting pension schemes to assess climate change risks when considering scheme investments?




  1. Are there suitable financial products to enable pension funds to make climate-conscious investments? How should such investment be facilitated and supported?


IN-CONFIDENCE_EMBARGOED_2021-Global-Investor-Statement-to-Governments-on-the-Climate-Crisis-1.pdf (theinvestoragenda.org)



  1. How should the UK seek to share and learn from international best practice?




  1. What regulatory changes or other government action has been most effective in delivering change in the UK; and what changes on the part of Governments elsewhere should the UK learn from?


“the growing number of countries committing to net-zero emissions goals by mid-century is the most significant climate policy development of 2020. To remain feasible and credible, these commitments must be urgently translated into strong near-term policies and action and reflected in NDCs.”



  1. Do pension schemes have suitable information to assess climate risk, or do there need to be international reforms to financial reporting?





June 2021