Here are the climate-related sections of speeches by MPs during the Commons debate Pension Schemes Bill (Fourth sitting).
Steve Darling (Liberal Democrat)
with the goals of the Paris Agreement on climate change and clean energy;”.
This amendment, with Amendment 270, would require pension funds and managers to show whether their portfolio investments are consistent with the Paris Agreement.
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Steve Darling (Liberal Democrat)
In tabling these amendments, we wanted to make sure that we calibrated them carefully. It is not about giving a clear instruction that says, “You must do this”; it is about ensuring that investors are alive to the Paris agreement on climate change and clean energy and that our water companies are complying with cleaning up our rivers and seas. Introducing a duty to report on how funds are having an impact on that would ensure a level of awareness without dictating to investors and thereby having an impact on the fiduciary duties that trustees should clearly have.
Throughout the Bill, the Government have quite rightly highlighted how pensions can be a force for good for our economy and for those who invest in it. The amendments would reinforce that approach. On climate change, clean energy and cleaning up our seas and rivers, the amendments are writ much larger, without interfering in where the money should be invested.
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Mark Garnier (Conservative)
These are not amendments that we feel particularly inclined to support. They would require pension fund managers to make, publish and keep under review data to show that their portfolio investments are consistent with the goals of the Paris agreement on climate change and clean energy. That would include publishing prescribed information relating to climate change alignment and sewage discharge. Those are immensely important and worthy ambitions and intentions; we share their spirit, as we want a cleaner planet, cleaner waterways and improvements to our climate, but I do not think that this is the place to do it. Pension funds should be allowed to look at the best interests of their members, irrespective of wider public and social aspirations, so this is not a proposal that we feel we can support.
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14:43 Kirsty Blackman (SNP)
I think this is the place to do it. In fact, I think every place is the place to do it. When we debated the Advanced Research and Invention Agency Act 2022, for example, I proposed that the organisation should be created on a net zero basis. I have tabled many amendments to whatever Bill I have been faced with that have included trying to meet our Paris agreement targets. I have served on Bill Committees quite a lot in the past few years—something my party keeps putting me up to do, for some reason.
The Paris agreement is the biggest issue. I have spoken already about how trustees are required to act in the interests of scheme members’ pensions rather than the interests of scheme members themselves. The Labour Government have tried to overcome that more generally, in terms of decision-making powers. They have tried to do that in Wales with the Future Generations Commissioner, who has the ability to judicially review decisions taken by public bodies in Wales. They can be called in for judicial review, and the Future Generations Commissioner can say, “This decision will cause a problem for future generations. It should be reviewed.” The Government are failing in their ambition to do the same thing in this Parliament. It is bizarre that I am about the only person in this place shouting about how great the Welsh Labour Government’s Future Generations Commissioner is—it is a really good idea.
When people out there are asked what the major issues currently facing the world are, many—particularly younger people—say that climate change is the biggest crisis we face. Scientists tell us that too, so it is completely reasonable that we ask everybody involved with anything to consider the impact of their decision making on our net zero target and on climate change. We ask all sorts of organisations to consider environmental, social and governance impacts. This is another time to do that, because we are creating a value for money framework anyway. We want value for money, but we want the best value—value for future generations. There is no point in everybody having great pensions if they do not live to see them because the planet is not here for them.
If we ask scheme members what they want, I think a significant number would say, “I would like more investment in things that make the planet a better place. I would like more investment in renewable energy and insulation for houses.” They would say that those are some of their priorities. They would obviously still like a guaranteed return too, but it is completely reasonable, in terms of the value for money framework and the best interests of people out there, that we consider the Paris climate change agreement. Sewage is important too, but it is not quite the existential crisis that climate change is.
When we think about a value for money framework, it is completely reasonable to talk about the Paris agreement. It is completely reasonable to ask about it in respect of any Government decision. I have written to the Chancellor in the past to ask for a carbon assessment to be published alongside the Budget—what is the impact on the Paris climate change agreement of the tax and spending decisions taken in the Budget, and how do they get us closer to our target?
I am happy to support all the amendments. As the hon. Member for Torbay said, they are not about forcing people to take decisions that are net zero in nature; they are about forcing them to consider the Paris agreement, or the regulatory targets for sewage discharges, when taking decisions. I do not think it is too much for us to ask trustees to be mindful of the impact on the planet of the decisions they are taking.
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14:46 Torsten Bell (Labour)
I thank the hon. Member for Torbay for tabling the amendments. Clearly, addressing climate change is absolutely central to this Government’s agenda. It needs to be done in the right way. Pension funds hold significant capital, and I am pleased to say that at every conference and every session I hold with people involved in the industry I see that investors and pension schemes do now use their influence on companies to encourage them to take responsible action. That has been a big change over the course of the last decade. It can lead to better risk management and potentially also improve returns on investments, as well as helping companies to perform better in relation to environmental targets.
My overall argument, though, is that trustees must already consider financially material risks, including ESG factors. The statement of investment principles and the implementation statement are key tools that are already in place for disclosing a scheme’s approach to ESG issues, including climate change. Ultimately, the amendment is about disclosures; that is what it aims to achieve. Additionally, large schemes with assets above £1 billion, which in future will be the majority of schemes because of the scale measures that we will come back to, must also report on climate-related risks and opportunities, in line with the Task Force on Climate-Related Financial Disclosures.
We are looking to strengthen sustainability reporting, exactly as the hon. Member for Torbay wishes to see, through new UK sustainability reporting standards and our transition plan’s commitment, which the Government consulted on this summer. Taken together, our policy initiatives will modernise the UK’s framework for corporate reporting, giving pension schemes vital information about companies’ decarbonisation plans and about whether to escalate their engagement efforts with investee companies on environmental issues. The DWP is contributing to that work and will review the effectiveness of climate reporting requirements later this year, as part of our post-implementation review of the requirements of the Taskforce on Inequality and Social-related Financial Disclosures.
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14:44 Steve Darling (Liberal Democrat)
Climate change is an existential threat to humanity, and although sewage may not be such a threat, it is still a significant issue; indeed, it is a wicked issue that needs to be tackled by our society as a whole. I wish to press the amendment to a vote, to show the Committee’s intent ahead of the Bill’s next stage.
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