Pension Schemes Bill [Lords]

Debate between Robbie Moore and Anna McMorrin

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

[Anna McMorrin]

I thank the Minister for his intervention, but, frankly, it does not go far enough, which is why I am speaking to these amendments.

The previous speaker, the hon. Member for North Norfolk (Duncan Baker), is a member of the Environmental Audit Committee. I was a member of that Committee in the last Parliament, and there was an inquiry into greening finance, chaired by Mary Creagh. We found that the UK’s financial investment chain was structurally incentivised to prioritise short-term profits rather than long-term issues including the climate crisis. That needs to change. Long-term sustainability must be factored into financial decision making, and our report recommended mandatory climate risk reporting and a clarification in law that pension trustees have a duty to consider long-term sustainability, not just short-term returns.

We also emphasised in that report that enforcing those recommendations would push climate change further up boardroom agendas, where it is seriously lacking at the moment. We found through our inquiry that less than half of the 25 largest pension providers discussed climate risk at board level. Their pension schemes, including those of Aviva, Lloyds Bank and HBOS, were all considered to be less engaged than peers among the top 25, so I am particularly pleased to see that Aviva has been instrumental in supporting this amendment.

Disclosure is vital in driving awareness that pensions may be invested in fossil fuel projects, fast fashion, deforestation and extraction. Driving that awareness out there about where their money is going means that people can take control of their pension decisions and make informed choices. Pension funds risk seeing assets become worthless unless they wake up to the climate crisis. The former Governor of the Bank of England and current UN special envoy for climate action, Mark Carney, has said that we must

“align finance with society’s values…This will help deliver the world that our citizens demand and that future generations deserve.”

He said it could be

“the greatest commercial opportunity of our time.”

It is critical that the changes come into effect as early as possible, rather than just 2050 or sooner, if they are to correct the catastrophic trajectory of our climate. We must go further. Amendment 16 would make provision for current and future Governments to significantly strengthen the Bill through secondary legislation. We stand at the brink of climate chaos the likes of which we have yet to experience, but which unfortunately may become all too familiar. If we do not take the necessary action now, I am afraid that we will not get the future our children deserve to see.

[Robbie Moore (Keighley) (Con)]

It is a pleasure to follow the hon. Member for Cardiff North (Anna McMorrin), and it is good to see so many great contributions from hon. and right hon. Members from across the House. Pensions are a life asset—something that we build up over decades—and getting the policies right and working across parties is vital, so it is fantastic to see such unity and cross-party working on many of the issues contained within the Bill.

As my hon. Friend the Minister has said, the Bill makes our pensions safer, better and greener. I will focus my contribution today on that final point: pension policy becoming greener. Tackling climate change and getting to net zero is undoubtedly one of the country’s biggest challenges, and it is a top priority for me. The clock is ticking, and we all need to take action, from big corporates right down to the actions we take as individuals.

In September, I was delighted to welcome the Pensions Minister to Haworth in my constituency to visit Airedale Springs, a fantastic local manufacturing business in the Worth valley. It supplies mechanical springs to UK manufacturers such as Brompton Bikes. Crucially, it is innovative, and a green business, too. The roof of its factory has more than 100 solar panels, helping to supply its energy needs and power the business, and I want to see firms across our country adopting those kinds of innovative practices.

Our pension funds have trillions of pounds invested in assets under management, and that pension power can help us work towards achieving net zero, because when someone saves money into pensions, the pension provider takes the money and invests it in order to secure a long-term return for retirement. When those savings are in sustainable and ethical investments, such as businesses adopting similar practices to Airedale Springs, the pension can play its part by helping not only with retirement but with climate change.

The changes legislated for through the Bill open up a world of possibilities for our pensions to be invested in new and innovative technologies for the future, such as wind power, hydrogen and carbon capture and storage—technologies that help create jobs and aid the transition towards net zero. The Bill means that for the first time, pension schemes will be able to be required to take the Government’s net zero targets into account, as well as the goals of the Paris climate agreement.

I want to take a moment to address some of the amendments before the House. On amendments 16 to 24, the reality is that the Government are already taking powers that will require trustees to set targets for their management of climate risk. So surely an approach whereby we nudge pensions towards investing in a sustainable and ethical way is the right approach, and that is the one that the Government are taking. Mandatory targets would, in my view, undermine the duty that pension trustees have to invest in the best interests of the people whose pensions they are investing.