12:47 The Minister of State, Department for Work and Pensions (Steve Webb)

New clause 12— Sustainability of private pensions: review of implications of climate change and natural resource constraints—

‘(1) The Secretary of State shall commission an independent review of the implications of climate change and natural resource constraints for the sustainability of private pensions.

(b) economic and physical impacts of climate change under various climate mitigation scenarios; and

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13:00 David Mowat (Warrington South) (Con)

The second set of governance issues relates to fiduciary duty and sustainability, addressed in new clause 12, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas) and amendments 54 and 55. By happy coincidence, I took part in a conference this morning organised by ShareAction. The hon. Lady was on the attendance list—perhaps she was sitting at the back heckling, but I did not see her there. The conference was to launch ShareAction’s green light project, which aims to get pension funds to take sustainability and climate change seriously. I was delighted to take part in that conference and I am very supportive of that agenda.

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13:15 Caroline Lucas (Brighton, Pavilion) (Green)

In someone else’s legislation— [ Laughter. ] Just between ourselves, I encourage the hon. Lady to keep up the pressure across Government, including at Business, Innovation and Skills questions, Energy and Climate Change questions and Work and Pensions questions. To be frank, this issue is not always at the top of the pension agenda, so I welcome the amendments for that reason. I am reluctant, however, to amend the Bill in a piecemeal fashion, when I hope that we can have a more overarching framework affecting company law, business regulation and the duties of trustees not only in pensions but beyond. I am sympathetic to what she is trying to achieve, but we want to do it in a systematic, cross-Government way rather than dealing with just a bit of the issue. I look forward to hearing what she has to say, but I hope that she will withdraw new clause 12.

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15:00 Gregg McClymont (Mrs Laing)

I have tabled new clause 12 and amendments 54 and 55 to highlight the need for the Department for Work and Pensions to address the systemic risks posed by climate change and natural resource depletion to pension schemes as a whole, and to suggest some positive solutions.

Obviously, pension funds use the money paid into them every month to make investments in shares of companies, bonds, properties and other assets, which makes them enormously powerful players in shaping the economy, especially as they have significant investments in fossil fuel companies. However, if we want to keep climate change below dangerous levels, we need pension funds to fund and support a low-carbon economy by, for example, investing in clean technologies and low-carbon infrastructure projects. Moreover, today’s report shows that the UK pension funds have £3 trillion at risk from so-called unusable fossil fuel investments—fossil fuels which, if we are serious about keeping to our climate change commitments, we simply cannot afford to burn. That is a huge threat to the incomes of future pensioners.

Looking further afield, 70 of the largest pension funds in the US and the world issued a statement last week setting out their view that major fossil fuel companies may not be as profitable in the future, precisely because of efforts to limit climate change. They are asking for details on how the firms will manage a long-term shift to cleaner energy sources.

“commission an independent review of the implications of climate change and natural resource constraints for the sustainability of private pensions.”

“consider the implications for long-term investment outcomes for members of work-based pension schemes of potential…systemic risks posed by high levels of exposure to fossil fuels and other carbon-intensive assets…economic and physical impacts of climate change under various climate mitigation scenarios; and…constraints on the availability of non-renewable resources”,

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