Climate change and your pension

Pension fund investments are affected by, and contribute to, climate change – we’ll explain how.

We’re making the investments in the Fund better for the planet, which makes them better for your pension at the same time.

A sustainable pension is 21 times more effective at cutting carbon than stopping flying, going veggie, and switching energy supplier combined. That’s according to research by the campaign Make My Money Matter.

Better for your pension as well as the planet

We invest the money in the Fund to protect its value

We invest the money in the Fund in companies, transport, buildings, and more, around the world.

Pension investments are affected by climate change

Take a shopping centre we invest in. Flooding, made more likely by climate change, could damage it. Droughts could destroy farmland that supplies food to supermarkets we invest in. These are risks that climate change poses.

As well as risks, there are potential benefits. To tackle climate change, we need clean energy, low-carbon tech companies, and more. Investing in companies that are well-positioned for the future helps your pension grow over the long term.

Pension fund investment emissions contribute to climate change

Most companies we invest in create emissions. For example, a technology company that makes computers emits greenhouse gases as it makes each product. And it emits greenhouse gases as it lights and heats its factories and shops, and as its employees commute in and out of work.

So we’re working to reduce those investment emissions

Reducing emissions helps protect the Fund’s investments from the risks of climate change, and benefit from the opportunities. It helps tackle climate change, while protecting the value of the Fund.

How we’re reducing our investments’ emissions:

Worker inspecting solar panels

Investing in renewable energy

We put some of the Fund’s money in investments that should benefit from the transition to a low-carbon economy, like wind and solar energy. These are well-positioned to grow in the future, and give us a return on our investment.

Photo of business presentation

Using our investor influence to encourage the heavy polluters to change

By investing in a company, you get a say in how the company is run. We could just stop investing in companies that have high emissions. But this won’t solve the problem of climate change. It will just pass the problem on to the next person who invests in them.

Instead, we use our say. We vote at company meetings and work with their boards. We encourage them to reduce emissions, set climate targets, and improve how they treat the environment.

For instance, we invest in Petrobras, one of the largest producers of oil and gas in the world. We’ve been using our investor influence with them to improve how they’re run – specifically encouraging them to be more transparent in how they appoint people to their board.

You can read more about our approach to responsible investment in our Implementation Statement (PDF).

Our progress in numbers:

We’ve set a target to get to our carbon footprint to net zero by 2040.

Reaching net zero means reducing our carbon footprint as much as possible. Any unavoidable emissions are cancelled out by removing greenhouse gases from the air, like by planting trees. That way there’s zero carbon emissions in total.

Our carbon footprint is measured by emissions intensity, which is the amount of greenhouse gas emissions per million pounds we invest.

This graph shows our current carbon footprint, and how we’re planning to reduce it over time so that we reach net zero by 2040.

Line graph showing the carbon footprint at its peak in 2022, reducing down to net zero by 2040. The graph is illustrative and does not use specific figures for the carbon footprint axis.

We now measure our emissions every year

We report on them in our yearly climate change report, which we produce as part of the TCFD – the Taskforce for Climate-related Financial Disclosures. What you’re reading now is a snapshot of it. If you want to, you can read our full climate report (PDF).

Our total carbon emissions

To reach net zero, our total carbon emissions need to reduce over time.

In 2022
38,354 tonnes of carbon emissions

Circle illustrating that there were 38,354 tonnes of carbon emissions in 2022

Our net zero alignment

This shows the percentage of companies we’re investing in that already have plans in place to be net zero by 2050. This figure should increase over time.

In 2022
11.4% of the companies we invest in are aligned with the Paris Agreement

Pie chart showing that 11.4% of the companies we invest in are aligned with the Paris Agreement. The remaining 88.6% of companies we invest in are not aligned with the Paris Agreement

These numbers cover some but not all investment emissions.

They cover:

  • emissions from a company’s day-to-day operations
  • emissions from the energy a company pays for

But they do not cover:

  • emissions from a company’s suppliers or supply chain
  • emissions from governments we lend to around the world

We are gathering supply chain emissions data, but it’s often unreliable. There’s more information about this, and how we continue to improve our emissions data, in our full climate report.