Guy Opperman, the minister who is responsible for pensions and financial inclusion has called on pension funds to increase their environmental commitment in a statement marking Green Great Britain Week.
Mr Opperman said: "Pension schemes, as the ultimate long-term investors, have a crucial role to play in giving their members a planet fit to live on and fit for the future. Greens Great Britain Week has provided a timely reminder for trustees that savers are wanting oversight of where their money is invested."
"That's why we've given pension schemes a duty to state how they take account of climate change and other environmental risks – and it's why we're putting power back in the hands of individuals, giving them the ability to see where their money is going."
Earlier this year, the Department for Work and Pensions (DWP) published new rules requiring pension schemes with more than 100 members to disclose the risks of their investments. This includes those that arise from environmental, social and governance (ESG) considerations. Three local government pension schemes have already pledged to align their investment portfolios with the goals of the Paris climate agreement, signed in 2016.
The DWP has indicated that the ESG is increasingly important for savers, so trustees and personal pension providers should have "a clear policy on how they will respond to the economic challenges and opportunities presented by a rapidly changing climate."
Mr Opperman's statement coincided with a speech he gave at the Pension and Lifetime Annual Savings Association in which he further spelt out his aim to increase investing for social, environmental, economic and climate change issue.
"I want to turn, if I can, to the issue of sustainable and responsible investments, and the nature of the particular investment. I accept that it is a difficult and tricky issue for someone in my position to give an opinion on to independent trustees."
"But the government has also undertaken some important work to clarify on pension schemes and how they invest, specifically when trustees consider their fiduciary duty in relation to environmental, social and governance factors."
"Our recent consultation on this issue attracted more than 3,000 responses. For a pensions consultation that's a very large number of responses. It is I believe an indication that as more people begin to save and begin to understand how their pension savings are invested, we could see a significant and realistic step change in the engagement and interest of this new population of savers."
"I believe that investing for social, environmental, economic and climate change issues, remains a topic we should be passionate about. I welcome the work that parts of the industry have done – led by Elizabeth Corley – in creating a culture of social impact investment. I will continue to engage across and beyond government to identify how we might remove barriers and make it easier to invest in a way that supports the sort of world we want to live in, going forward."