Performing arts and entertainment trade union, Equity, has called on the Chancellor to use the Pension Schemes Bill to make "smart, strategic reforms" that could unlock a "staggering" £1.2trn from the pension sector for growing clean energy and infrastructure in the UK.

An open letter from the union said the government could do this by reforming pension rules and pledging more public finance to generate green growth, suggesting that these changes would also lower bills and pollution levels, while creating good jobs and a healthy economy.

Research from Make My Money Matter suggested that this step would also be popular with members, as it found that two-thirds of the UK's pension holders want their savings to invest in clean energy.

"Clearly, the appetite is there to put our money into companies offering solutions to the climate and nature crises we face," the letter stated.

"Now we need to harness the extraordinary, untapped potential of our pensions to build a safer world.

"You, as Chancellor of our new Labour government, have a once-in-a-generation opportunity to unlock this potential - starting with the Pension Schemes Bill. "

In particular, the union encouraged the government to require pension funds to adopt science-based transition plans that recognise fossil fuel expansion is not compatible with meeting the 1.5° limit.

It also suggested that the government should clarify that pension trustees must take climate and nature risks into account as part of their fiduciary duty to act in the best interests of their members.

"In the past, funds that exclude highly polluting industries like oil, gas and coal have been considered low return," it noted.

"This is a market failure that ignores the risks an unstable climate and polluted natural world pose to our longer term financial stability and pension returns."

In addition to this, it said that the government should pledge more public finance for green growth and support pension funds to drive private green investment in the UK, arguing that "where the government leads, the private sector will follow".

Whilst the union said that the announcement of a landmark pensions review and the new Pension Schemes Bill is "greatly encouraging", it argued that "this next decade is crucial".

"There is £3trn in UK pensions. But, because of regulatory obstacles and a lack of scalable opportunities, just 4 per cent of that is being invested in climate solutions," the letter stated.

"By including these smart, strategic reforms in the Pension Schemes Bill, we can mobilise a staggering £1.2trn to tackle the climate emergency."

The call for action comes as Equity revealed that its own £130m pension scheme has moved to a fund with "extensive" fossil fuel exclusions, meaning tha members' savings will be invested in companies that align positively with the UN's sustainable development goals.

In line with this, the fund won’t invest in companies involved in thermal coal, nor those making more than 10 per cent of their revenue from oil and gas.

This will be the default fund for members joining Equity’s pension scheme from November 2024, while existing members will switch over in April 2025 (unless they choose to opt-out).

The move was celebrated by Equity members, who include Mark Rylance, Olivia Colman, Benedict Cumberbatch, Stephen Fry, Jodie Whittaker, Paapa Essiedu, Alex Lawther, Freddie Fox, Ritu Arya, Will Attenborough, Leila Mimmack and Tom Burke.

Rylance stated: “When we change, the whole world changes. Divesting from businesses and practices which are not harmonious with life on Earth is, I believe, an essential step for all of us to consider.

"Pensions are a powerful driver in society. I do not want this time of enormous challenge for all life on our planet to become a story of force, dictatorship, fear and war. Let us change the story by changing ourselves as a union of artists and choosing life over profit.”

Adding to this, Attenborough and Mimmack, said: "All of us, no matter where we come from, want a safe, healthy world to raise our families and retire into. This campaign shows what happens when people get together and use their savings to build a fairer future.

"Now we're looking to our political leaders to back us up. Banks, pension funds and insurers are using outdated models that ignore the severe risks of drilling for yet more fossil fuels.

"The new government has an opportunity to set this right and unlock our money as a force for good."

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