Pension funds pledge to make $130bn green investments by 2030
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The Environment Agency Pension Fund, Greater Manchester Pension Fund, Merseyside Pension Fund and master trust Nest are among 25 Nordic and UK schemes that, at COP26, have committed to investing a combined $130bn in clean energy and climate investments by 2030.
It is generally acknowledged that the green transition will require huge sums of investment which go beyond what governments are willing or able to provide.
Danish prime minister Mette Frederiksen said governments have to play their part and commit to a green future, “but we also need private investors on board”.
The 25 schemes committing to investing in the transition are doing so via the Climate Investment Coalition - an international public-private initiative between the Danish Ministry of Climate, Energy & Utilities, Insurance & Pension Denmark, the Institutional Investors Group on Climate Change, Finance Denmark and the World Climate Foundation.
CIC said the next stage, from 2022 onwards, will be to mobilise new commitments, in particular from investors in the EU, UK, US and elsewhere. The CIC works directly with institutional investors to ensure that their commitments are being implemented, tracked and reported on annually to reach investment targets by 2030 or earlier.
"As we look ahead beyond COP26, we aim to grow these financial commitments, raising investor ambition to create a far-reaching impact by 2030,” said Peter Damgaard Jensen, who co-chairs the coalition.
'Pledge signals investors appetite'
The IIGCC’s chief executive, Stephanie Pfeifer, observed that total investment in the energy system alone needs to increase 9.6% per year between 2020 and 2030.
“Quantitative targets from IIGCC members to scale up these investments are a clear sign of their commitment to supporting the net zero transition over the coming decade. These pledges also signal to policymakers, project developers and corporates that investors are seeking additional investable opportunities," Pfeifer said.
One of the UK pension funds involved, Nest, has set itself a goal of reaching net zero by 2050. Chief investment officer Mark Fawcett said the fund has already taken steps to reduce the portfolio’s carbon footprint and halve its emissions by 2030.
“This includes a commitment to invest billions of pounds into renewable infrastructure over the coming decades. We want to give Nest members a bigger pension in a better world and helping to tackle climate change is a key part of that,” he said.
The collective commitment has been welcomed by campaigners Make My Money Matter, whose campaign director David Hayman said it shows how powerful pensions can be in tackling global warming.
"Along with today’s political announcements on deforestation, it is clear that those who hold our money can no longer shirk... their responsibilities – they must act with the urgency that the world demands,” he said, and urged others to follow suit.
MMMM has previously called on the government to make net zero mandatory for pension funds. Currently, there is legislation in place to make schemes with £1bn or more in assets manage climate risk but no obligation to achieve net zero.
