Pension Schemes Bill

Baroness Bennett of Manor Castle Excerpts

Monday 23rd March 2026 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with some trepidation; I am not going to get into that particular discussion, although I entirely agree with the intention of the noble Lord, Lord Hendy, without getting into the legal details.

I rise briefly to express Green support for Amendment 167 from the noble Baroness, Lady Hayman, which she so ably introduced. As I understand it, the government amendment is, essentially, delivering the same purpose. I said at Second Reading, which I recall was the day before our Christmas Recess, that my festive conversations were entirely preoccupied by the term “fiduciary duty”, which was really appropriate to the season—but what we are talking about is really important.

Having got into the legal details, it is worth coming back to what we are talking about here. Pensioners are people. They have to live on this damaged and deeply unhealthy planet. They hope to live for many years, so what their money is invested into has real, concrete impacts on their lives. It is in their interests that their money is invested well for the future. That is why we support the government amendment.

--- Later in debate ---

[Baroness Griffin of Princethorpe (Lab)]

My Lords, I have added my name to Amendment 170 and will speak briefly in support. The noble Lord, Lord Sharkey, has comprehensively set out the amendment and, following very helpful feedback from my noble friend the Minister, I will simply respond to a few points which were made by other Peers in Committee.

It was suggested that the UK is a small player in thermal coal and will not make a difference. We actually have the largest volume of pension assets in Europe and the third largest globally. There is no limitless demand for high-risk assets, so were the UK pension sector to sharply lower its exposure, this would not lead to a rush for companies that everyone knows to have a limited lifespan. As was said:

“It seems absolutely bonkers that new money is going into new coal mines”.—[Official Report, 23/2/26; col. GC 285.]


It does not make sense in terms of protecting the environment, and it does not make sense economically to invest in stranded assets.

These investments are not only in equities but in bonds. The effect of buying equities on the secondary market may not be instant but, over the long term, it is likely to support the reduction in the cost of borrowing or increase the returns on equity funding. This ultimately supports more investment. The Transition Pathway Initiative, established by the LSE, has assessed the decarbonisation plans of the top coalmining firms. After two decades or more of engagement, none is remotely close to being aligned with the Paris agreement and, as was admitted, opportunities for future company-level engagement are strictly limited by the threat of litigation in the US. Indeed, the suggestion that an exit strategy from thermal coal inevitably means exit from tobacco, sugar or energy-using forms is scaremongering. We should judge the amendment on the basis of what it does.

As the noble Lord, Lord Sharkey, said, Amendment 170 does not require an exit from anything. It seeks only to give government the tools to monitor and manage a risk that it has quite rightly admitted that it does not currently have a handle on. Risk management is a core part of fiduciary duty on investments which have been variously judged by my noble friends as carrying high financial and climate risk. Every child deserves to breathe clean air.

I look forward to hearing from my noble friend the Minister. I am extremely grateful for her genuine engagement so far about the Government’s plans for further action in this area.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to join a distinguished cross-party group, signing and speaking to Amendment 170. Like the noble Lord, Lord Sharkey, I want to reflect back to what was said in Committee, when the Minister said that she shared the cross-party concern about pension scheme investment in thermal coal, that she recognised the high financial and climate risks, and that she welcomed some industry-led reductions in exposure. She said that the Government would

“support and challenge the sector in rising to that task”

and that the levers to do that included

“better data and better transparency”.—[Official Report, 23/2/26; col. GC 291.]

That is what this amendment aims to deliver, because the transparency is just not there now.

Transition plans are often cited as a solution to this. These were a manifesto commitment in July 2024, to meet Paris alignment transition plans, but 18 months into this Parliament, there has not been a response to a consultation which took a year to emerge, and more or less asked, “Should we do all of this?” Recently, the Pensions Minister, Torsten Bell, said that transition plans for pension schemes were not a priority, which is reinforced by the fact that the Government are not taking powers in this Bill. There have been suggestions that consolidation will fix all this, but an analysis by Corporate Adviser Intelligence shows that the DC multi-employer schemes most commonly used for automatic enrolment are in fact the largest of them and more invested in thermal coal, and that the mid-sized schemes that would be consolidated are less exposed.

It is also worth stressing that there is a precedent for Ministers writing directly to the largest pension schemes to understand their responsible investment practices and for the Government setting non-statutory expectations about pension schemes’ investment practices. Those on the Front Bench in front of me will probably not thank me for pointing out that when they were in government, they set out a non-statutory expectation in the 2019 green finance strategy that pension schemes and others would disclose climate risks in line with the Task Force on Climate-related Financial Disclosures by 2022. Later, the then Pensions Minister, Guy Opperman, wrote to the 50 largest pension schemes to request their policies and understand their climate investment strategies. That is what the previous Government were doing—surely this Government do not want to be behind that.

It is clear that there is actually a latent appetite to go further. Two-thirds of the audience, mostly representatives of pension funds, at the recent Pensions UK conference debate between Caroline Lucas, my former honourable friend, and the noble Lord, Lord Gove, agreed that pension funds were not now doing enough to tackle the climate change risks. These are, as I said in Committee, financial as well as climate risks. We simply are not taking the steps that are needed. This amendment would provide the way forward that the Minister suggested in Committee that she wanted to see. Here it is, so I hope to hear positive news from the Government on this amendment.

[Baroness Hayman (CB)]

My Lords, I have added my name to this amendment. Given the quality of the speeches that have explained exactly what it would do and its very limited but important purpose—simply to allow the Government to have a proper handle on the data and a proper understanding of the exposure that pension schemes have to thermal coal investment—I think it would be a valuable step forward, one that I hope will get support from all around the House. In Committee, the Minister rightly acknowledged the high financial and climate risks associated with thermal coal investment and indicated that it was the Government’s expectation that industry will do more to reduce levels of coal investment, but we need to understand exactly what those levels are and to monitor them. For that reason, I support the amendment.