Pension Schemes Bill [Lords]

Debate between Richard Graham and Gareth Davies

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

[Gareth Davies]

I am grateful to the Minister for his generous remarks and I thank him for his support of my campaign to bring about green gilts in this country. I agree that it is a way in which pension funds can contribute to the climate change effort in a meaningful way, moving billions of pounds of capital towards the goals that everybody across this House really wants to achieve, so I thank him for that intervention.

Finally, I fear that, although the amendment is well-intentioned, it is poorly focused. In my experience, trustees want to invest with purpose and according to their values. Likewise, fund managers have, over the past several years, moved great mountains, a lot of money and a lot of effort to incorporate ESG risk into most of their investment processes, and I do not believe that any asset manager in the future will be able to survive unless they integrate ESG climate risk as part of their investment process.

[Richard Graham]

As a trustee of the parliamentary pension fund, may I highlight that the changes on page 118 of the Bill on climate change risk are incredibly important and will help encourage trustees and pension funds in general to make investments that are pro-environment, pro-green and pro-climate change? I am absolutely in agreement with my hon. Friend that the proposed additional new clause 16, which would require pension funds to align with the Paris agreement goal, is a step too far. Does he agree that the Minister should focus on that in his summing up as well?

[Gareth Davies]

I am very grateful to my hon. Friend for his intervention. I agree that the Bill is sufficient in its current form to be able to achieve what we all want to achieve, which is to get pension funds to invest in a climate-aware way.

The last point that I will make in concluding is around this point on focus. In my experience, it is not the fund managers or the trustees whom we need to persuade or to make do anything, but the middle men and women—the gatekeepers, the investment consultants —who typically require a five-year track record and £100 million in assets held by fund managers and managed by fund managers. In my experience, that was always the issue. We were running money in a way that was really pushing things forward in terms of our climate targets. We knew that the pension clients really wanted to invest with us, but, because we could not meet the requirements of the investment consultants, we could not marry the two together. If we use the combined intellect, passion and energy of this House, from all parties, to come up with a solution to that, we could make great progress.