The UK’s largest pension providers are “persistently failing” to address their role in financing both a climate and nature crisis, according to pressure group Make My Money Matter.
Its latest report scores the 12 biggest DC providers on a range of climate issues, and says while there has been some progress the overall average score of 4.5 out of 10 is “inadequate”.
The campaign group, founded by filmmaker and activist Richard Curtis, argues that this puts savers’ money, and their future, at serious risk.
Overall the report found that Nest performed best with an overall score of 5.8. This was followed by Aviva and Now: Pensions in joint second (with a score of 5.5) and Smart if fourth, with a score of 5.4.
Providers were scored by sustainability research provider Profundo on a number of themes, including commitment to 1.5 ̊C targets, measure and disclosure, detailed target setting, investment into climate solutions, approach to deforestation and fossil fuels and the stewardship instruments they use.
Of the 12 providers Royal London had the lowest score at 3.3, only narrowly beaten by Standard Life with a score of 3.5. Both were rated as inadequate by Profundo’s scoring system, but no provider garnered a lower ‘poor’ rating this year.
However, MMMM said there was lethargy among providers, with the scores of Standard Life, Fidelity International, NatWest Cushon and Legal & General all declining from year on year
Itadds that on the “critical” issues of fossil fuel phaseout, and deforestation & land use, the average score across these providers was under three out of 10.
The report says that the pension industry continues to invest in oil & gas companies that are driving global heating with new fossil fuels. Overall it said seven of the 12 providers (Aegon, Aviva, Fidelity International, Legal & General, Royal London, Standard Life, and Scottish Widows) told Make My Money Matter that they invest in Exxon.
MMMM points out that Exxon has recently set a 5-year plan to boost oil and gas output by 18 per cent — even though the world agreed at COP28 to transition away from fossil fuels. This is despite commitments from all seven of these providers to half emissions by 2030.
MMMM says shareholder action on fossil fuel companies is weak too, with Aviva and Legal & General both voting in support of management, including their pay package, 44 out of 45 times at the Shell and BP AGMs in 2024.
However, it points out that a number of providers have improved their score significantly since last year, including Smart Pension, Now: Pensions, Aegon and The People’s Pension.
Overall average scores have risen across almost all themes compared to last year, and four of the 12 providers now score 5 or above (‘adequate’) compared to just three last year.
MMMM added that the most positive finding from the 2025 ranking is that taking the highest score across each theme would produce an overall score of 7.6/10 for an ‘ideal’ pension fund — setting a new public benchmark of what is possible if all pension funds stepped up and learned from their peers.
Many of the providers, including those that scored poorly, said they were aligning investment strategies to address issues like climate change.
In a statement to Corporate Adviser Royal London says: “We’re committed to reducing emissions from our investment portfolio by 50 per cent by 2030 (from a baseline of 2020), and to achieving net zero by 2050. These commitments are based on the expectation that governments and policymakers will deliver on their commitments to achieve the goals of the Paris Agreement.
“It would be quicker and easier to achieve those targets by divesting from high-emitting companies. While divesting may seem like a simple solution, this would mean that we are unable to influence change in those companies. We believe, therefore, in engaging with the highest-emitting companies in our portfolio to encourage and support positive real-world change.
“The path to net zero remains complex, but we are making progress and emissions from our portfolio have reduced compared to our baseline. We will continue to keep reporting on our progress and how we are performing against our targets while also developing climate-aware investment solutions that will enable our customers to invest in the low-carbon transition.”
Meanwhile The People’s Pension confirmed the scheme does not own Exxon equity in its growth portfolio. Its head of responsible investment Leanne Clements added: “We appreciate the value of civil society actors in holding pension schemes to account for their approach to climate change. We are pleased to see that Make My Money Matter has acknowledged The People’s Pension’s improvements to its approach on climate change over the past year since the previous survey, notably with regards to the launch of the climate indices, publicising our net zero targets, and strengthening our expectations of fund managers on climate stewardship, including deforestation, as highlighted in our Responsible Investment Policy. We will have more advancements in this space in the coming months, and we look forward to communicating them to the wider industry.”
An L&G spokesperson said:“As a large, global asset manager we take our role as a responsible investor on behalf of our clients very seriously. Climate change is a critical issue of global concern. We engage actively and constructively with companies on the transition to a low carbon, net zero economy.”
The Pensions Regulator climate and sustainability business lead Mark Hill added: “Climate change will impact the long-term performance of pension investments. Most pension schemes meet their legal duties, but our research shows many are only doing the minimum.
“People expect their money to be managed well and to receive the best value for their investments. We are challenging schemes to ensure they consider a broad range of material risks which could threaten their savers’ retirements.”
Make My Money Matter is calling on savers and employers to challenge their pension provider on their climate performance.
Make My Money Matter CEO Tony Burdon says: “We are seeing the ferocity of the climate and nature emergency increase year on year – and it is set to worsen without urgent action. But the UK pensions sector is still failing to stop financing this crisis and is putting the retirement of British savers at serious risk.
“Whilst it is good to see that some providers like Nest – now ranked at number one – along with Now and Smart, have responded by improving their policies on climate and nature, others like Standard Life and Royal London continue to fail their savers.
Averting the worst of an impending climate and nature catastrophe is humanity’s biggest collective challenge of our time. Our pension industry, our high street banks, government, and regulators all now need to step up and treat it as such.”
Profundo director Jan Willem van Gelder adds: “Progress shown by UK pension providers in addressing the climate crisis is slow and lacks behind the most responsible of their peers in continental Europe.
“Especially in dealing with the fossil fuel sector, most UK pension providers are not taking the steps which are required. While the International Energy Agency already in 2021 demonstrated that no new oil and gas fields should be developed anywhere in the world, the oil & gas sector is consciously denying the urgency of the climate threat by investing billions in new developments.
“This destructive behaviour should not be funded by British pension pots, the pension providers need to follow the lead of European pension funds by divesting from the companies destroying our climate.”
