Legal & General Investment Management (LGIM) has pointed the finger at defined benefit schemes for being behind the curve on climate transition.
The asset managers says that the typical DB scheme is currently aligned to a 3°C outcome – twice the Government’s target of keeping global warming to within 1.5°C, and out of step with an increasing number of DC schemes that are targeting Paris-aligned net zero targets.
LGIM’s figures come from data that analyses the average allocation of the UK DB pension market, as disclosed in the PPF Purple book 2020.
The figures follow a call earlier this month from Make My Money Matter CEO Tony Burdon at the Corporate Adviser Summit, demanding that all pension schemes be required by law to follow net-zero strategies. His organisation calculates that despite £800bn of pension assets adopting net-zero strategies, £2 trillion is sitting in pension funds that had not made this pledge. “These pension funds are driving 2.7 degrees warming which could have catastrophic effects for the planet,” said Burdon.
Nick Stansbury, head of climate solutions at Legal & General Investment Management (LGIM) comments:
“We welcome the opportunity for greater transparency on how UK pension schemes are aligned to the Paris Agreement. Our own analysis shows that the typical DB scheme is currently aligned to a 3°C outcome – twice the Government’s target of keeping global warming to within 1.5°C.
“We have been encouraged by the number of schemes who are addressing the urgency of climate risk by starting on the pathway to decarbonisation; but it is clear that there is much more work to be done if the UK is to meet its 2050 commitments.”
“LGIM is committed to helping schemes transition their assets in line with global pathways towards net zero by 2050 and will work collaboratively with clients to set decarbonisation goals for their portfolios. At LGIM we engage with companies and policy makers to drive real change, support our clients in understanding the issues and setting their own net zero targets and will continue to develop our product range to broaden access to Net Zero aligned strategies across asset classes.”
