How our pensions could tackle climate change

Lisa Nathan

With the record of 400 parts per million of carbon in the atmosphere this year, if we continue pumping carbon out at our current rate our planet will be four degrees warmer by the end of the century. The climate change question has moved beyond the scientific: “is this happening?” to a clear: “what can we do to prevent it?”

In the past individual solutions to climate change have been seen as limited to energy-saving light bulbs and recycling household waste. But the power of an individual to make a difference can go far beyond simple consumer choices. Pension savers have the power to kick-start the shift in investment away from high carbon projects and get their funds to support the just transition to a low carbon economy instead.

Automatic enrollment is adding between six and nine million new savers to the UK’s private pensions system, which, with over £3 trillion of assets under management, is already the third largest in the world.  Through the companies they invest in, pension funds ‘own’ almost a quarter of the UK’s carbon emissions. Effectively this means anyone with a pension could be funding climate change.

Many pension savers would object to their savings causing environmental harm, and financially it’s a risky choice as well.

If governments do act to limit global warming to two degrees, many of these current high-carbon projects will move quickly from profit to loss. According to Lord Stern, if governments don’t act then the effects of climate change (rising sea levels, flooding and scarcity of resources) could permanently wipe out 5-20 per cent of global GDP.

If the billions invested in fossil fuels were diverted into a range of climate solutions, including clean technology, green infrastructure, and energy efficiency,  our funds could not only protect our savings, they would create a safer planet for the savers of today to retire on. Institutional investors like our pension funds hold the key to unlocking a greener, fairer future.

Today, alongside our union and civil society partners, ShareAction are launching a new campaign to bring savers together to call for change. We want our pension funds to devise and disclose climate change policies, divest from companies whose sole business is thermal coal, demand stronger action on climate from policy makers and disrupt the flow of capital to fossil fuel projects that bring onstream new sources of unburnable carbon.

For this campaign to work, we need savers to put direct pressure on their pension funds. We’ve launched a simple e-action at www.greenlightcampaign.org.uk  with a tool that savers can use to email their pension fund and demand that their savings fund a safer, sustainable future.

We are calling for the pension fund system to disentangle itself from the web of short-term, risky projects, and instead act to protect our savings and build a low carbon economy. Join the movement here. 

 

Lisa Nathan is a researcher at ShareAction. The campaign is supported by their union and NGO partners including Unite, UCU, Unison, TSSA, Greenpeace and Oxfam

1 comment:

  1. David Walker

    Hi, sounds like you’ve never heard of Peter Drucker and his book Pension Fund Socialism, which long ago stated the fact that workers (tomorrow’s pensioners) ‘own’ capitalist enterprise through their pension savings. So it’s not just green action that pension funds could take: they could invest ethically, support only companies that pay a minimum/living wage, support only companies with fair remuneration policies, etc.
    Two problems: a) pension funds aren’t transparent and their managers are locked into the same culture as the companies they ostensibly own, so rarely apply pressure; b) pension fund ‘members’ are unaware/passive. Like company shareholders, they effectively give their proxies to maintain and not change the system.

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