Pensions Minister, Guy Opperman, has called for pension schemes to increase their investments in renewable energy sources to help the UK achieve a net zero economy.

In an essay series published by the Chartered Banker Institute and the Social Market Foundation, Opperman said that if the “productive power” of UK pension funds is “unleashed” by financing green tech and energy, they can be at the forefront of seizing sustainable opportunities.

He noted that, as the UK is hosting the COP26 in Glasgow next year, it was “vital” that the UK becomes a “world leader” in promoting sustainable and ethical investments.

“So we can harness the financial muscle of our massive pension portfolios going forward, I want to see our British pension funds investing in new technologies such as wind, solar, and hydrogen,” Opperman wrote.

“These innovative technologies can turbo charge the way we travel, help us achieve net zero, and provide the long-term return that savers need.”

However, Opperman noted that he did not believe forcing pension trustees to divest from high-carbon stocks as the way forward in achieving net zero.

He stated that selling high-carbon assets to others without the same environmental concerns “is counterproductive”.

“By investing in assets, trustees can nudge, cajole, and vote firms towards lower-carbon business practices,” Opperman continued.

“Collaboration is the best approach. The UK can and will lead the way both in terms of achieving net zero, but also in the provision of green tech and the financial know-how to get us there.

“Net zero is a long-term challenge facing our country. By unleashing the productive power of our pensions and engaging with savers, we can get there.”

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