Pension Schemes Bill

Debate between Baroness Sherlock and Lord Sharkey

Committee stage
Monday 23rd February 2026 Grand Committee

[Baroness Sherlock (Lab)]

My Lords, I am very grateful to the noble Baronesses, Lady Hayman and Lady Coffey, and the noble Lord, Lord Sharkey, for introducing their amendments, and all noble Lords for contributing to a very interesting discussion. I will start with Amendment 212 from the noble Lord, Lord Sharkey.

While I recognise the aim behind this amendment, the Government believe that decisions about whether to invest, divest or engage must rest with trustees, who are already legally required to invest in the best financial interests of their members and to consider climate-related risks as part of that duty.

[Lord Sharkey (LD)]

My Lords—

[Baroness Sherlock (Lab)]

I cannot get two sentences in before I am interrupted.

[Lord Sharkey (LD)]

I am sorry, it will not happen again, but the Government are trying to do precisely what the Minister said they should not do: they are trying to mandate investments.

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[Baroness Sherlock (Lab)]

Let me explain. We are concerned that replicating the climate provisions of Sections 41A to 41C of the biodiversity Act 1995 on a separate statutory track risks creating overlapping or potentially inconsistent strategies, metrics, scenarios and governance. Trustees could find themselves operating parallel regimes that could cut across one another, generating unnecessary process burden without necessarily improving outcomes for savers.

Crucially, there is also a sequencing issue. Although the evidence base on nature-related financial risk is advancing rapidly, nature data remain less mature than climate data, and the international baseline is still being established. Last November, the ISSB announced the beginning of nature-related standard setting, with the intention that these will become the global baseline. More than 30 jurisdictions worldwide have already adopted, or are preparing to adopt, these sustainability standards. Introducing a UK-specific statutory duty ahead of those developments would risk locking schemes into a domestic framework that could quickly be superseded internationally.

As I noted in our earlier discussion on Amendment 212, the Government are progressing their commitment to credible transition plans, beginning with companies. We believe that it would be premature to legislate for a separate, pension-specific biodiversity regime in advance of those cross-economy frameworks and the ISSB’s nature baseline. Our approach is to sequence reforms so that pension disclosures plug into a consistent, interoperable flow of corporate information, rather than obliging trustees to build bespoke and potentially temporary architecture. As part of our forthcoming statutory guidance on trustee investment duties, we will consider including concrete, good-practice examples of how schemes can identify, assess and manage biodiversity and broader nature-related risks, including supply chain deforestation, nature dependency mapping, data sources and stewardship escalation, as well as how to treat nature-related impacts where they are financially material.

The Government’s role is to enable and accelerate this momentum with coherent, internationally aligned frameworks; it is not to create parallel statutory silos. For these reasons, although we fully share in the intent behind Amendment 218E—I acknowledge the work done by the noble Baroness, Lady Coffey—we do not believe that this approach is correct. This has been a very good debate but I hope that, in the light of my remarks, noble Lords will feel able to withdraw or not press their amendments.

[Lord Sharkey (LD)]

The fact is that some, though not all, pension funds are invested in climate-changing activities. We need to do something about that, and we need to do it soon.

The other point I ought to pick up is, again, to do with statutory guidance. I have frequently asked when we will see the guidance, but the only thing I know for certain is that it will not be before this Bill becomes law. Parliament seems to be being bypassed in all this—and in all the secondary legislation that will be necessary to make this mean anything at all. It is reasonable for guidance to explain how pension schemes should go about considering certain matters, but it is not reasonable for what those matters are to go unscrutinised by Parliament and to be changeable at the whim of a Minister. Parliament will be unable to hold the Government to account. Why is it that, in the face of such concerns about guidance and fiduciary duty, as well as the obvious inherent dangers to the proper exercise of fiduciary duty, the Government choose to exclude Parliament?

I beg leave to withdraw my amendment.

Pension Schemes Bill

Debate between Baroness Sherlock and Lord Sharkey

Committee stage
Thursday 22nd January 2026 Grand Committee

[Lord Sharkey (LD)]

Can the Minister respond to the point I made about statutory guidance?

[Baroness Sherlock (Lab)]

I will answer that next week, if that is okay, when we discuss the issues of fiduciary duty.

Pension Schemes Bill

Debate between Baroness Sherlock and Lord Sharkey

Committee stage
Monday 12th January 2026 Grand Committee

[Baroness Sherlock (Lab)]

I was going to say that I am grateful to the noble Lord, but I am not sure that I am, really. I am sure he has not missed the fact that the amendments put forward by the noble Lord, Lord Sharkey, do not apply simply to the LGPS provisions in the Bill. They would have widespread application throughout the Bill and implications beyond it. I say that they would have all these implications and I am talking about trustees because they would have a significant impact on the way that all those actors in the pension space would be able to engage in future.

In the past, I have heard people around the House criticise Governments for making decisions at the centre without engaging with those in industry and business who have to deliver them. I know that, if the Government had given huge amounts of certainty and left nothing out there, the criticism would simply be the reverse of what we have heard today. We have to find a balance. The Government believe we have found the right balance. Some Members of the Committee will disagree. I have looked carefully into this, and I am defending the balance that the Government have come to, but I accept that if noble Lords disagree, we will have to come back to this in due course.

We think the existing framework already strikes the right balance between scrutiny and practicality, enabling Parliament to oversee policy development while allowing essential regulations to be made in a timely and orderly way. In the light of my comments, particularly about the proportionality of this, its comparability with previous pensions legislation and the degree to which it is in continuity with the way pensions legislation has traditionally been made by successive Governments, I hope the noble Lord will feel able to withdraw his amendment.

[Lord Sharkey (LD)]

I am grateful to all those who have contributed to this brief debate. The complexity described by the Minister is obviously real and clearly important, but one of the ways of dealing with complexity is to have the instruments to simplify it and discuss it. My response to the scenario painted by the Minister would be to say: let us have super-affirmative procedures and accept that they will take up a bit more time and involve a bit more work, but, as I pointed out, that is their entire point.

Skeleton Bills always limit parliamentary scrutiny, and the Pension Schemes Bill is not an exception to that; in some ways, it is a confirmation of it. I understood the Minister’s case, but the Government’s desire to limit parliamentary scrutiny is a mistake. The SIs generated by this Bill will have real consequences for the real economy. We cannot usefully discuss these consequences until we have the detail. It seems to me as simple as that. Of course, having the detail helps only if we can do something about it, and the super-affirmative procedure provides that opportunity.

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[Lord Sharkey (LD)]

If the noble Lord is asking why it is there, I am afraid I will have to plead the Public Bill Office.

[Baroness Sherlock (Lab)]

I am advised that Amendment 220 had been withdrawn, not just not debated. We will look into that, and the noble Lord will need to clarify it.