Pension stewardship and COP26

Work and Pensions Committee Closed Inquiry
Opened: 29 Apr 2021 Closed: 2 Feb 2022 Parliament page
The UK hosted the 26th UN Climate Council Conference of Parties - COP26 - in Glasgow between 1 and 12 November 2021. 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 … Read more
15 Recommendations
5 Conclusions
1 Report
2 Oral sessions
2 Events
Activity timeline 4 events
17 Dec
2021
Report published
30 Sep
2021
Report published
14 Jul
2021
Oral evidence
30 Jun
2021
Oral evidence
Oral evidence sessions 2 sessions
14 Jul 2021
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Work and Pensions
Emma Varley · Department for Work and Pensions Guy Opperman MP · Department for Work and Pensions Pete Searle · Department for Work and Pensions
30 Jun 2021
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Pension stewardship and COP26
Andrew Ninian · Investment Association James Alexander · UK Sustainable Investment and Finance Association Mark Fawcett · Nest Morten Nilsson · BT Pension Scheme Paul Bucksey · Smart Pension UK Sam White · Aviva Tony Burdon · Make My Money Matter
Title HC No. Published Items Response
Fourth Report - Pension stewardship and COP26 HC 238 30 Sep 2021 20 Responded
Recommendations & Conclusions
6 results
Clear
2 Recommendation Rejected
Fourth Report - Pension stewardshi…
The Minister for Pensions and Financial Inclusion told us that the Government as a whole...
The Minister for Pensions and Financial Inclusion told us that the Government as a whole is responsible for sharing best practice internationally on investment reporting. We recommend that, in order to increase the prominence and accountability of this important task, … Read more
Government Response
The government rejects the recommendation for a single Minister to lead this work, stating that global best practice requires co-operation and leadership from a range of stakeholders. It highlights existing multi-departmental efforts, including a high-level Transition Plan Taskforce and the proposed SDR regime.
Department for Work and Pensions
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9 Recommendation Rejected
Fourth Report - Pension stewardshi…
The idea of “net zero alignment” does not have a single clear definition.
The idea of “net zero alignment” does not have a single clear definition. Without a standardised definition, there is a risk that different pension schemes will interpret “net zero” in different ways. That will make it more difficult for savers … Read more
Government Response
The government rejects the recommendation for the Pensions Regulator to define a single net zero alignment, citing difficulties, and instead proposes requiring pension schemes to calculate and report one of three flexible portfolio alignment metrics.
Department for Work and Pensions
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11 Recommendation Rejected
Fourth Report - Pension stewardshi…
While larger schemes are setting net zero targets, it is likely that many smaller schemes...
While larger schemes are setting net zero targets, it is likely that many smaller schemes will not have the resources to do this effectively without support and guidance. Ambiguity about whether net zero targets would put trustees at risk of … Read more
Government Response
The government rejects the recommendation to establish a working group, stating that significant progress is already being made and that the Pensions Regulator's existing climate change strategy and engagement methods are sufficient for developing and adapting guidance for pension schemes on net zero targets.
Department for Work and Pensions
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12 Recommendation Rejected
Fourth Report - Pension stewardshi…
Defined contribution schemes used for automatic enrolment are required to have a default option into...
Defined contribution schemes used for automatic enrolment are required to have a default option into which the member is enrolled, unless they specify an alternative. We recommend that the Government consult on the case for mandating that these default options … Read more
Government Response
The government expresses concern that mandating climate goal alignment might force divestment, hindering stewardship, and therefore rejects the recommendation, instead focusing on consulting on guidance to encourage effective stewardship.
Department for Work and Pensions
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14 Recommendation Rejected
Fourth Report - Pension stewardshi…
There are a limited number of suitable green assets in which pension schemes can invest.
There are a limited number of suitable green assets in which pension schemes can invest. That means that there is a risk of a “green asset bubble” in the short term, as the market for these products develops. It is … Read more
Government Response
The government rejects the recommendation, stating it does not agree and that publishing information on direct investments (which was not the core of the recommendation) would not be practically feasible.
Department for Work and Pensions
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17 Recommendation Rejected
Fourth Report - Pension stewardshi…
Direct investment by pension schemes in green infrastructure and other illiquid assets has the potential...
Direct investment by pension schemes in green infrastructure and other illiquid assets has the potential to benefit savers and the environment. We recommend that the Department for Work and Pensions publishes information about levels of direct investment by pension schemes … Read more
Government Response
The government rejects the recommendation, stating it is not practically feasible to publish information on direct investments due to the complexity of pension scheme portfolios. It highlights existing regulations to drive assessment and disclosure of climate risk instead.
Department for Work and Pensions
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Government Response AI assessment · 20 of 15 classified
Accepted 9
Acknowledged 3
Deferred 1
Not Addressed 1
Rejected 6
Total 15 recs + 5 conclusions