The government should ensure that short-term growth isn’t prioritised over growth that protects the environmental and social underpinnings of the economy, LCP has said, emphasising the need to put sustainability at the heart of the government’s growth agenda.

In a blog post, LCP partner, Claire Jones, argued that, when seeking to increase investment in the UK economy, the government should consider carefully which types of investment and economic activity it wants to encourage.

In addition to this, it said that the government should ensure they are attractive investments in their own right, so that pension trustees choose to invest in them to help meet their schemes’ objective of providing retirement income.

According to LCP, this could include providing a clear, supportive and stable policy environment for those investments, introducing blended finance vehicles that share the risk of early-stage investments, and/or offering fiscal incentives.

This is similar to the messaging shared by LCP in its response to the recent consultation on consolidation in the defined contribution (DC) market, in which it recommended that instead of focusing on scale as a way to encourage investment, the government should be explicit about the types of investments it wants to see.

Building on this response, Jones suggested using three ‘tests’ which would ensure that an investment is sustainable as well as promoting growth.

In particular, LCP encouraged the government to consider whether the investment is aligned with the UK’s commitment to net-zero emissions by 2050, whether it is contributing to nature-positive outcomes, and whether it is avoiding significant harm to other sustainability goals, such as the UN’s Sustainable Development Goals (SDGs).

LCP partner, Claire Jones, said: “My request to the government is a simple one: rather than focusing on the question of how pension schemes might support UK economic growth, ask instead how pension schemes might support sustainable UK economic growth.

“In other words, growth which protects – and preferably enhances – the environmental and social underpinnings of the economy, on which future prosperity and pension benefits depend.”

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