Pension Funds: Financial and Ethical Investments

Deidre Brock Excerpts

Wednesday 22nd May 2019 Westminster Hall

[Patrick Grady (Glasgow North) (SNP)]

It is always a pleasure to serve under your chairmanship, Mr Howarth, and I congratulate you on managing to fit in nine Back-Bench speeches, as well as the one by the right hon. Member for Kingston and Surbiton (Sir Edward Davey) and several interventions. That demonstrates the importance of this issue to hon. Members across the House and their constituents.

I congratulate the right hon. Member for Kingston and Surbiton on securing the debate, and on framing it in such an interesting way that enabled us to consider both the ethical and the financial risks of investment in fossil fuels. As well as risks, however, there are immense investment opportunities. We have an important chance to get this right and to build a cleaner, greener and more sustainable future for us all.

The subject is of considerable concern to many of our constituents—I have certainly received emails about it, and people have come to my surgery to speak to me, which is always a demonstration of the importance that people attach to an issue. The divestment campaign has been running for a considerable time. In 2014 there was a successful campaign at the University of Glasgow in my constituency, since when the university has made a concerted effort to divest away from polluting and fossil fuel technologies.

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.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

Does my hon. Friend agree that consistent, reliable policy frameworks from Governments are essential when encouraging investors to take up the ethical investment opportunities that I know they are keen to take up?

[Patrick Grady]

My hon. Friend is right, and I hope we will hear that point from the Minister.

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.

--- Later in debate ---

[Guy Opperman]

The hon. Gentleman and I went into the same Lobby when we voted on that matter. He has heard that the House gave universal support to the debate that was taking place. I am not here to make policy on behalf of the whole of the Government, but the Government will respond formally to the 2 May report shortly. He will have to bear with us until that stage.

[Deidre Brock]

Will the Minister give way?

[Guy Opperman]

I will not give way again, because I have very little time left.

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.

Green finance is a key priority for my right hon. Friend the Minister for Energy and Clean Growth, who set up the green finance taskforce which, with the clean growth strategy, will drive economic growth as part of industrial strategy, to ensure that the UK remains a driving force in enabling the global transition to a low-carbon economy. A green finance strategy paper will be launched later this year, which will set out the Government’s green finance objectives on an ongoing basis.

I want to talk about consumers. It is absolutely the case that members can make individual choices. They can choose to move their individual pension into a self-selected fund that aligns with their own objectives, such as an ethical fund. We massively support such an approach and feel that it is the right thing to do.

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.