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UK master trusts ignoring climate duties

Most of the UK’s biggest pension schemes are ignoring new regulations by failing to directly engage with large investee companies on their role tackling climate change.

18 DEC 2019 | CHRIS SEEKINGS
Schemes failing to engage on climate risks ©iStock
Schemes failing to engage on climate risks ©iStock


After analysing the 16 largest master trusts, managing over £34bn in assets, ShareAction found that only Nest and TPT Retirement Solutions directly engage with big companies on climate risks.

This is despite new regulations requiring pension funds to publish policies on how they incorporate environmental, social, and governance (ESG) issues in their investments.

It was also found that the majority of large pension funds are delegating responsibility for voting and climate engagement activity to their asset managers.

ShareAction said this is concerning because the new regulations require schemes to have their own policies on stewardship activities, including voting and engagement.

The findings come after separate research found that climate change policies could permanently wipe up to $2.3trn (£1.75trn) off the valuation of the world’s largest companies by 2025.

"Millions of savers are putting their life savings into the hands of pension funds who are playing a dangerous game with it," said ShareAction campaigns manager Lauren Peacock.

"By passing the buck on climate change, they give little comfort that the world and their savings will be protected come retirement."

NOW: Pensions was described as having a “simple policy” on ESG, showing limited action on responsible investment.
A further eight schemes showed some signs of imbedding ESG into their investments, but limited action on climate change.

Nest, TPT and the People’s Pension are the only schemes who go into depth on climate change in their ESG policies, pointing to the need for robust engagement with companies in their portfolios.

The findings also show an increase in ESG funds into master trusts’ default asset allocations, but that there are low levels of engagement between schemes and policymakers.

“Younger savers are beginning to connect the dots between their personal finances and their impact on the planet,” Peacock continued.

“We hope these master trusts sit up and listen to these findings before it’s too late.”


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