14:30 Ed Davey (Liberal Democrat)

I refer Members to my entry in the Register of Members’ Financial Interests, in which I disclose my interest in renewable energy, particularly solar.

Parliament has declared a climate emergency. I welcome that tremendously, but it prompts the question: how do we solve that emergency? The good news is that many of the technologies we need are already here, and they are developing fast. From solar to wind to storage, their price is coming down fast—far faster than many people expected—and their reliability is increasing dramatically. On top of that, massive innovation will propel those technologies further forward, and we will enter a cheap green energy age.

The barriers to dealing with the climate emergency are no longer technological; they are more about policy, leadership and cash. We need politicians to show leadership, but we also need to ensure that investment funds get behind the new technologies at a speed and with an urgency that currently we are not seeing. That is why we, as a country and as the world, need to disinvest from fossil fuels and dirty technologies, and reinvest in clean green technologies. The question is how we propel that as fast as possible.

I believe we need a system-wide approach. We have to decarbonise capitalism at a fundamental level across the whole of the City—the debt markets, the stock exchange, the banks, the Bank of England’s own balance sheet and the pension funds. The Committee on Climate Change has asked for Britain to become carbon net zero by 2050, but we produce only 1% to 1.5% of global greenhouse gas emissions. However, 15% of the world’s greenhouse gas emissions are funded in London, so not only do we have the power to get our own country’s greenhouse gas emissions down to zero, but we can help spread that around the world and be a real leader. We could be the green finance capital of the world and say, “We will no longer finance the climate crisis in our country.” If we did that, we would show dramatic leadership in the world on this emergency. We should start with pensions.

I believe that is not the case. We need to ensure that the parliamentary pension fund becomes zero-carbon. We as Parliament need to say, “Divest Parliament.” That would show leadership both to public schemes, particularly in local authorities, and to the wider sector. Let us remember that we have already discovered four to five times the fossil fuels the world would need to exceed a climate change budget. We already have too many fossil fuels. We should not invest in more. We should disinvest now.

The previous Government target to cut carbon emissions by 80% by 2050 is no longer relevant because we have to cut our emissions to net zero, so fracking, which is a source of carbon fuel, is no longer an option for this country. Should not the Government reflect that new reality and issue new planning guidance for local authorities or give them new powers? Such leadership would have an immediate consequence: investment in fracking as a source of fossil fuel would no longer be an option or attractive to investors.

I congratulate the right hon. Gentleman on securing this important debate. I agree entirely that Parliament should take the lead in not investing in fossil fuels. Yesterday, BP’s investors decided that it should adopt a totally different strategy on carbon fuels so it fits in with the Paris agreement on climate change. Does he agree that other companies should take that way forward?

That brings me to my argument. Not only is there a moral imperative for us to divest, given the threat climate change poses to our planet; there is also a financial risk for pension funds and their beneficiaries. We need to explore that. We need to make it clear to pension fund managers and trustees that pulling out of fossil fuels is the right thing to do in financial terms. The real issue is often called the carbon bubble. We are investing in more fossil fuels than we could possibly need if we were going to stay climate change compliant. At some stage, that bubble of investment in carbon that we do not need will burst, leaving pension funds and the wider economy in a serious mess. Those assets would be worthless; they would be stranded assets, which would cause huge disruption in our financial sector.

Another approach is to say, “Let’s reduce, and ultimately stop, exploration for further fossil fuels. Let’s not inflate that bubble any more. Let’s gradually deflate it, so we can have an orderly transition for our economy, our energy sector and all the communities, towns, cities and people who depend on it.” That is the solution, and that is why I have concluded that we must disinvest and reinvest in a thoughtful, careful way. If we do that, we can tackle the climate emergency and avoid a financial and economic catastrophe.

We need to make capitalism our servant, not our master, and that comes from laws and regulations in this House. I propose a five-point plan systematically to decarbonise capitalism and tackle the disinvestment and investment challenge of the pension funds. First, there should be mandatory disclosure from all fossil fuel companies on how much carbon their business plans would see emitted and how much carbon is in their reserves. That should be coupled with a legal requirement to show how they will become compliant with the Paris treaty, with timed targets, so that fossil fuels can unwind the pollution they cause.

The right hon. Gentleman seems to be advocating a reduction of investment in energy companies. Does he recognise—I am sure he does from his time as Energy Minister—that many such companies, and particularly the larger international oil companies, are investing in new technologies, cleaner technologies and research and development in renewable energy?

We have a climate emergency, and it is great that we are seeing people—young people in particular—coming out and protesting. I celebrate what they have done. There is a thirst for Governments to take action. The question is: are our actions up to it? The only response to what people are arguing for and what the science says is a quite dramatic systemic change. In the disinvest and reinvest approach and the policies I have outlined, I want to argue for something very radical but practical.

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14:47 Richard Graham (Gloucester) (Con)

I have three points to highlight. First, this is a challenge for all pension funds not just in the UK but across the world. The rules and regulations by which pension funds are governed have changed significantly, not least under this Conservative Government. The Law Commission reports of 2014 and 2017 are relevant: 2014 was the first time that pension funds had in effect an obligation to take ethical or environmental issues into account. The 2017 changes allowed for some social investment. The parliamentary guidance to which my hon. Friend the Pensions Minister referred, which came in last autumn, made a significant change in requiring trustees to report, as part of the statement of investment principles, on the portfolio’s effect on climate change and what trustees intended to do about that. That is the background.

My third point is that there is a challenge not just for pension funds, but for the wider financial sector. The most innovative green energy projects in the UK, particularly those looking at how we can mobilise some of the most powerful tidal streams in the world—including wave technology in the north of Scotland and cases being worked on in Cornwall, Hampshire and the west coast of Wales—are not easily accessible investment vehicles and are not at the scale that a significant pension fund could easily invest in. It would be useful to look at challenges around some investment regulations, including how major investors, such as large insurance companies that manage huge pension assets, could be allowed to invest more money almost in creating businesses to invest in new technologies.

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14:53 Matt Western (Labour)

Mark Carney, the Governor of the Bank of England, recently wrote about that. He said meeting the Paris targets

More recently, the Environment Agency decarbonised its £2.9 billion pension fund by increasing climate positive investments, reducing its exposure to the coal industry by 90% and greatly reducing its exposure to oil and gas. More parochially, Southwark Council has moved £450 million into passive funds that track low-carbon and fossil-free indices produced by MSCI. It has invested £30 million in the Glennmont Partners clean energy fund III, which invests in western European wind and solar companies. For me, that shows great leadership and is to be commended.

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14:58 David Warburton (Somerton and Frome) (Con)

The question we are looking at today might seem divorced from the emergency that Parliament has rightly declared in respect of climate change, but in fact it cuts to the heart of the issue. There is a causal and consequential link between finance and the environment, as we have heard, as well as environmental implications of investment strategy and supply chains.

As Members will be aware, article 2 of the Paris agreement states the need to make

“finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”

If we are to achieve a net zero target before 2050, we require not only political will but the active support of all sectors of society. The low-carbon sector and its supply chain now provide nearly 400,000 green-collar jobs in the UK—more than aerospace—and are growing considerably faster than our main economy, with estimated potential exports of more than £60 billion by 2030. Lord Deben, chair of the Committee on Climate Change, said that the CCC had been deliberately cautious in drawing up its 2050 target and had deliberately excluded the impact of technological innovations, as we heard earlier, which could hasten the UK’s progress towards a net zero target in ways that cannot currently be anticipated. So our progress in meeting our environmental targets directly depends on the prosperity of our green economy.

“prepare a climate change policy”

The Governor of the Bank of England and the Environmental Audit Committee have publicly warned of the dangers of over-exposure to carbon assets in the light of the international drive towards net zero. Hon. Members will be familiar with the 2006 Stern review and the pivotal role it has played in shaping understanding of the interaction between climate change and the economy. Lord Stern recently suggested that the economic models under which current projections are produced systematically underestimate the economic implications of climate change and its effects. A study published last year by the co-director of the Oxford University climate econometrics project describes the catastrophic economic consequences of a 2° C jump in the global temperature, and how, beyond that headline figure, the poorest countries will suffer the direst economic effects.

Since the introduction of auto-enrolment in 2012, the percentage of UK workers in a pension scheme has mushroomed. Ignoring the effects of investment strategies really is disastrous short-termism. The parliamentary fund needs to demonstrate the beautiful truth that long-term measures to mitigate climate change and long-term investment strategies are not incompatible—far from it. In fact, they can form a fabulous virtuous circle, and one that I hope will be beneficial to us all.

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15:03 Alex Sobel (Labour)

The physical impacts of climate change, such as rising sea levels and increased frequency and intensity of extreme weather events, will pose increasing economic risks for a range of businesses and investments, from food and farming to infrastructure, homebuilding and insurance. In the UK alone, climate change is projected to increase the risk that business assets and operations are damaged and disrupted by flooding, degrade some of our most productive agricultural land, to reduce water supplies, to increase the frequency and intensity of heatwaves, and to stress transportation, energy and water infrastructure. There are a great many risks for investors to consider.

For instance, climate change may result in liability risks when those who suffer losses as a result of climate change take legal action to recover damages from those who can be found responsible. For example, the city of New York is currently seeking to recover costs from BP, ExxonMobil, Chevron, ConocoPhillips and Shell as a result of flooding. Transition risks could also be faced by companies in high-carbon sectors that fail to diversify and adapt to policies introduced in response to the Paris climate change agreement. Firms that do not make a timely transition and remain over-invested in climate-changing activities could face costly regulatory action, suffer reputational damage, or see their assets become stranded as carbon prices rise. Our inquiry found several examples of stranded assets, such as oil refineries or fracking infrastructure. A Bank of England paper published in 2016 warned that

Our Committee heard about a range of worrying practices in the pension industry, including the fiduciary duty of pension scheme trustees often being misinterpreted as a duty to maximise short-term returns; remuneration for investment consultants and fund managers encouraging a pursuit of short-term returns rather than long-term value creation; and a tendency to under-invest in physical assets, technology innovation and employees’ skills in preference for nearer-term gains from financial mergers, acquisitions or restructuring. In the context of our climate change risk, we want none of those things.

It is really good to hear hon. Members talk about climate change and greenhouse gases, but there are in fact nine planetary boundaries, of which greenhouse gases are one. I wonder whether people understand that it is entirely possible that we save the planet from climate change yet kill ourselves through eight of the other planetary boundaries, two of which we are in the red for. Is it not the case that financial markets, pension schemes and so on actually need to see their remit as wider than just greenhouse gases, also covering a range of other areas, including biodiversity and carbon?

Absolutely. A range of factors, including air quality and the insect population and pollinators, should be taken into account. It is not just about fossil fuels, but as the debate mainly concerns fossil fuels and climate change, I will concentrate on those. I recently led a debate on insect populations. It is good that we are looking at all of that in the round.

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15:13 Dr Alan Whitehead (Southampton, Test) (Lab)

I congratulate the right hon. Member for Kingston and Surbiton (Sir Edward Davey) on securing this debate. I think he slightly understated the carbon bubble in his opening remarks. The carbon bubble—basically the evaluation of assets that we know will never be realised—is not something that might burst in the not too distant future. It will inevitably burst because energy companies have systematically overvalued their assets and put them on their balance sheets. Not only will the historical overvaluing be in question, but all the valuing for the future will be in question, basically in line with where we now know we have got to go on net zero in our economies.

To reassure the hon. Gentleman and others, it is perfectly possible for pension fund trustees to take the view that their fiduciary duty of obtaining good returns to deliver the pensions expected is not incompatible with taking into account huge amounts of other issues, including climate change. It is important that we all recognise that. We have a duty to look at that as well.

I agree with the hon. Gentleman that some pension funds are beginning to take a different view. Indeed, that different view is becoming more possible, but the general consideration of the fiduciary duty remains a short-term gain for pensioners in the funds. Of course, the people setting out on their working lives will not get the benefit of those pension funds for 30 or 40 years. During that time inevitably we have to move to the net zero carbon economy. It is therefore essential that pension funds have a duty to look at the long term.

Having said that pension funds tend to invest in bonds and various other things that are primarily about energy bonds, on the assumption that there will be value, which we know will not be there in future, there is then the question of moving towards investment in things that do make a difference to climate change. Pension funds have a genuine problem in terms of the Solvency II regs, which tend to guide pension funds away from investing in the schemes that are capital-intensive up front and revenue less intensive behind, that are at the heart of the green investment revolution.

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15:20 Sarah Newton (Truro and Falmouth) (Con)

I pay tribute to the Minister who, I know, completely gets this issue. In an article in The Times today he talks about the potential to be gained from unlocking the huge investments in pension funds to tackle climate change, and he makes a good case. Picking up on that, I ask him to work with his colleagues, particularly in the Department for Business, Energy and Industrial Strategy, and to look at the opportunity to harness through local industrial strategies the potential for investment by local authority pension schemes in clean growth.

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15:22 Thangam Debbonaire (Bristol West) (Lab)

People around the world are wising up to the risks of fossil fuels, and my constituents want me to do everything I can to get Parliament’s contributory pension fund to lead by example. The University of Bristol has already done so by divesting from its climate change-inducing fossil fuel funds. Investing in fossil fuel funds is, as we all know and as has been said, bad for the planet and for business. I do not want my pension to be invested in funds that jeopardise the future of the planet and the future of my nephews and nieces and their children. As a pension fund contributor I urge the trustees to change their investment strategy and to be fully transparent. In responding to the climate change emergency Parliament must get its own house in order.

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15:25 Helen Hayes (Labour)

I commend the climate change protesters who have taken to our streets in recent weeks, including many schoolchildren from my constituency who will be out again on Friday. They have succeeded in putting climate change where it should always have been, at the top of the political agenda. They are right to protest and they are right not to rest until the action that we need is taken and carbon emissions are falling.

It is good that Parliament has declared a climate emergency, but we need action now that is commensurate with an emergency. Divestment is critical to that. One of the essential systemic changes that we need to make is to look at the big flows of investment finance in our economy, divert them away from harmful, polluting and exploitative fossil fuels and reinvest them to scale up sustainable zero-carbon change.

The parliamentary pension scheme remains invested in fossil fuels. Five of the top 20 investments of our pension fund are in fossil fuel companies. The pension fund trustees have been far too slow to react to calls for divestment and are still refusing to do so, despite the fact that more than a third of MPs have written to them about it. The divestment of our pension funds is a straightforward leadership action that Parliament should take. No increased risk is entailed and in fact the opposite is true. The climate change emergency demands it.

Finally, we need the law to drive a further change in divestment. Although arguably the law currently requires pension fund trustees to invest in line with the Paris agreement, new legislation is needed to clarify and strengthen the duty. Reporting of fossil fuel-based investments should be mandatory and there should be a duty on all investors to report on the alignment of their portfolios in relation to the Paris agreement. This cannot be left to chance. We will not tackle climate change by retaining the status quo and fiddling around the edges. We need systemic change and it must start with our own leadership and a legislative framework that drives investment finance nationally and globally away from fossil fuels and towards the sustainable investment we need.

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15:29 Patrick Grady (Glasgow North) (SNP)

As the extremity of climate events increases, the urgency becomes clearer and the momentum behind the campaign continues. Hon. Members have mentioned that energy companies and other such industries are willing to engage with that momentum, but they also need support and incentives. The declaration of a climate emergency is crucial because it helps to reframe that policy debate. We in Parliament have declared a climate emergency, civil society is doing so, and Glasgow University and Glasgow City Council have done so. The Scottish Government and the SNP have also made that declaration, but I think I am right in saying that the UK Government have not done so yet. They may have accepted the motion that was passed but they have not yet declared a climate emergency, and that is a missed opportunity to show leadership.

Difficult decisions will have to be made. The Scottish Government have halted their plans to cut departure tax at airports, and the First Minister said in the Chamber that we will have to look again at our stance on the expansion of Heathrow. Those are the ways that we can begin to make that just transition, and that is the importance of the Divest Parliament pledge, which I and the vast majority of SNP Members have signed and are happy to endorse.

It is right to place an emphasis on both the ethical and the financial risks. The ethical risks are there for us all to see. The impact of over-reliance on fossil fuels over the years most affects people in developing countries, whose consumption of fossil fuels has been the least, but who are feeling the impact of climate change first and hardest. As the hon. Member for Somerton and Frome (David Warburton) said, this is not just about financial prudence; there is also a financial logic to switching investments towards clean, green and diversified technologies. Even without a reduction in emissions for reasons of climate change, fossil fuels are a finite resource, and one day they will run out. We must make the transition.

While we still use fossil fuels, we must do so as cleanly as possible. That means investment in things like carbon capture and storage, on which the UK Government have again been woefully lacking. Governments have a responsibility to create a climate-friendly investment environment. The Scottish Government are doing their part with solid environmental and ethical considerations and procurement guidance, as well as the establishment of the Just Transition Commission, which will seize those transition opportunities while ensuring that communities are not left behind as they were during the deindustrialisation of the 1980s.

The UK Government must play their part, and we heard interesting proposals from the right hon. Member for Kingston and Surbiton about aligning decisions to the Paris agreement targets. I suggest that aligning decisions to the sustainable development goals would also make a lot of sense. In reserved areas, the Government should fully operationalise carbon capture technologies and accelerate action to decarbonise the gas grid. They should redesign vehicle and tax incentives to support industry, and commit to adhering to future EU emissions standards, irrespective of our future status within the EU. They should reduce VAT on energy efficiency and home improvements, and support the renewables industry more generally. All that would create a more incentivised investment environment for new, clean and green technologies.

We should listen to the future generations and climate change school protesters. If they wish to claim a pension in a sustainable environment in decades to come, that will require action now to tackle climate change and build a financially viable and sustainable pension fund. For them we must seize this opportunity and look not just at financial and ethical risks, but at the financial and ethical opportunities of a cleaner, greener and more just world.

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15:35 Mike Amesbury (Labour)

It is not every day that I agree with the Liberal Democrats, but we certainly have common ground on this issue. We are in a climate emergency, and when we talk about moving towards a greener economy, we must be clear that the time for debate and discussion alone has passed. It is now time for clear, concrete and urgent action. As my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes) so powerfully argued, we must make no mistake: this is a climate emergency; this is a crisis.

One could argue that climate change has never been so prominent in public consciousness and political discourse. Despite the Brexit-related dramas in Parliament, which still continue, between 15 and 25 April, climate change was high on the news agenda in response to Extinction Rebellion protests in London, a major BBC documentary presented by Sir David Attenborough, and the visit to London of a Swedish schoolgirl. They led the way for many of us.

Over the past 12 months, according to pollsters, the environment has risen in public concern. In a YouGov poll conducted on 29 and 30 April, 24% of people placed the environment among the top issues facing the country—about the same level as concern about the economy and immigration. That is a stunning development. We know from our postbags the levels of concern among the public about the climate emergency. Nothing short of a major transformation from fossil fuels to renewables will be good enough. Changing the ways that pension funds invest will not solve the crisis on its own; it must be part of a much wider approach—a new green deal, or a green industrial revolution. We have made some progress but, my God, we need to make considerably more if we are genuinely to tackle this emergency.

My hon. Friend the Member for Warwick and Leamington (Matt Western) highlighted the fact that the Labour-led Southwark Council has moved £450 million into passive funds that track low-carbon and fossil-free indices. It has also invested £30 million in Glennmont’s green energy fund, which invests in western European wind and solar companies. Many trade unions—I declare an interest as a member of Unison—have produced excellent and accessible guides to divesting away from fossil fuels, and I know that has been welcomed by representatives on local government pension committees and schemes up and down the country.

Parliament has started to take this issue more seriously and put its own House in order. In June last year, 11 hon. Members, including the shadow Chancellor, called for Cambridge University to remove its £377 million fossil fuel investments. In addition, 244 serving and former MPs have signed the Divest Parliament pledge, calling on the trustees to phase out investments in fossil fuel companies. The trustees are developing a climate change investment policy, but not quickly enough, as highlighted powerfully by my hon. Friend the Member for Bristol West (Thangam Debbonaire). We want that policy to commit to phasing out investment in fossil fuel companies in the earliest timeframe possible and to reinvest the money in funds aligned to the Paris agreement.

This country’s pension assets, as highlighted by my hon. Friend the Member for Warwick and Leamington, total some £2.8 trillion. Pension savings should be at the forefront of the fight against climate change. Pension savers have money invested for the long term, so it is particularly exposed to climate risks, as powerfully argued right across the Chamber. This concern is now relevant to more of us than ever.

Given the clear threat that climate change poses, we would all hope that it would be the norm for pension schemes to manage the risks. Unfortunately, research from the charity ShareAction finds that, for many, their retirement savings are unlikely to be sufficiently protected against climate risks. In a survey of some of the UK’s largest defined-contribution corporate pension schemes, just two of the 15 participating schemes had changed their default investment strategy specifically to reduce the exposure of employees’ savings to climate change risks. Although ShareAction found that a handful of schemes are considering further policy developments in this respect, the fact that a gulf exists in the strategies of schemes means that workers face a lottery from one job to the next as to whether their savings are sufficiently protected against climate change.

As the Minister stated in an intervention, the new pensions investment regulations, in force from October 2019 and to be strengthened in 2020, go some way towards addressing the issue. Scheme trustees will need to update policies to show how they take climate change into consideration as a financial risk. However, as my hon. Friends the Members for Norwich South (Clive Lewis) and for Southampton, Test (Dr Whitehead) argued powerfully, we need to go considerably further.

We need to send clear signals that tackling climate change and other environmental, social and governance risks is not distinct from the core purpose of financial markets, but an integral part of it, as the hon. Member for Ochil and South Perthshire (Luke Graham) argued in his intervention. Of course, as we divest from fossil fuels, we must ramp up investment in clean and green technology. Labour has set out plans to fit 1.75 million homes with electricity-generating solar photovoltaic panels, creating thousands of quality skilled jobs across the UK. That is a Labour green deal that will shift energy generation via renewables to 85% by 2030. It will provide a major boost to an industry that is still recovering from the effects of the coalition Government’s ill thought out slashing of feed-in tariffs, which was such a blow to a growing and vital industry.

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15:47 The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)

This Parliament accepts that there is a climate emergency, and this debate, which I am delighted so many colleagues have embraced this afternoon, has focused on the following key issues: the change that clearly is taking place in our climate; the role of the consumer; the choices that are available to the individual parties that we are dealing with; and, ultimately, the role of capitalism and its ability to assist in addressing these particular problems.

Although we celebrate these good things, they are patently not enough. Although we will plant more forests, recycle more and, crucially, try to engage our consumers, our citizens, our constituents to change their behaviour, we do, I suggest, need capitalism to save the day. I agree with my hon. Friend the Member for Truro and Falmouth (Sarah Newton) that we need to urge local authorities to focus on the clean growth strategy that has been set out by the Government to address the way we do housing and the way we do energy on a localised basis. I believe very strongly—any Conservative will make the case—that capitalism is a force for good, because we need technological innovation to solve the climate change issues, and innovative start-ups will be needed to address the access to capital and the changes that are required.

I accept my hon. Friend’s point. The crucial point is that natural gas had been one of the biggest parts of reducing carbon dioxide in the electricity sector. Hydrogen derived from natural gas will decarbonise heating for homes and transport. The large companies are leading the way on carbon capture and storage. We must work with them to ensure that the successes, which we all want to see, continue.

To address the point made by the hon. Member for Norwich South (Clive Lewis), those occupational pension schemes regulations require that trustees must—the emphasis is on “must”—set out their policies on environmental, social and governance matters, including climate change, and how they engage with the companies in which they invest. Those regulations also introduced a requirement for trustees of DC schemes, where the member bears the financial risk of poor investment decisions, to report on how their investment policies are being put into action and make all of that information publicly available online.

For too long there has been a perception by too many trustees—I am happy to clarify this as a Government Minister—that the environmental practices of the firms they invest in are purely ethical concerns, which they do not need to worry about: that is utterly wrong. Aside from the ethical considerations, there are real financial risks resulting from climate change. With the long-term horizons of pension investing, trustees must now consider that when they set out their investment strategies. Trustees who do not consider those matters will be breaching their statutory and potentially their fiduciary duties not only to current but future members.

I will come on to some of those particular points. In terms of regulatory guidance, which has been raised by several hon. Members, there is no doubt that the Pensions Regulator is planning to publish further guidance on managing the climate change risk in advance of those regulations, which come in to place in October. A key point is that non-compliance with those regulations can potentially lead to sanctions from the Pensions Regulator, which is acutely mindful of its obligations and what it needs to do to address this particular point.

As a Government, we will respond shortly to the advice from the Energy and Climate Change Committee on the target for net zero emissions by 2050. That advice was only published two weeks ago. Colleagues will be aware of the 25-year environmental plan, which has been set out in detail. It commits to using resources from nature more sustainably and effectively, and achieving a clean air, water and wildlife approach.

The Minister began by saying that Parliament has declared a climate emergency. Do the Government also recognise and declare a climate emergency? His remarks on the recent report from the Energy and Climate Change Committee indicate that the Government must declare a climate emergency.

I want to address a couple of points made by the right hon. Member for Kingston and Surbiton (Sir Edward Davey). He asked whether we are creating a coalition of the willing. I strongly suggest that we are. We are working with the Institutional Investors Group on Climate Change, ClientEarth, ShareAction—which I have met on several occasions—and the UK Sustainable Investment and Finance Association. There is a serious amount being done to ensure we are aligned with the Paris agreement. The widespread global commitment to the Paris agreement suggests that trustees have a responsibility to align their investment strategies with its aims.

However, it is fair to say that there is no definitively agreed consensus on what being aligned to those aims of being below 2° mean for a specific pension fund and its asset allocation. That is why I am delighted to see the initiative of the Institutional Investors Group on Climate Change, which is developing a common understanding of what such alignment means for pension schemes, and the Government will work with it on that point.

On transparency, which my hon. Friend the Member for Banff and Buchan (David Duguid) mentioned, the Government intend to announce further transparency measures on the topic of responsible investment in the coming weeks, in respect of the shareholder rights directive. This Government absolutely accept that there is a climate emergency and we are addressing this. I thank the right hon. Member for Kingston and Surbiton for bringing forward this vitally important debate, which all of us have engaged with and embraced as the right way forward. I look forward to updating the House on further developments, particularly in October after the regulations kick in.

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15:58 Ed Davey (Liberal Democrat)

I thank everyone who has contributed to this debate, which has been really good. There is some degree of consensus emerging. I agree with what the Minister said on carbon capture and storage. I was disappointed that the former Conservative Chancellor, George Osborne, got rid of the CCS projects that I had been developing as Secretary of State for Energy and Climate Change, particularly the gas CCS which was a world-leader. I regret that, because I think it was an extraordinarily bad decision for the gas industry.

In the context of the role of the UK and the City of London internationally, we need to go further. If we can lead from the City of London, we can decarbonise capitalism not only here, but globally. That will be the biggest contribution that Britain can make to tackling global climate change.

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