The proportion of pension schemes that have made a commitment to net-zero carbon emissions rose by 11 percentage points over the past 18 months to 68 per cent, according to a survey by the Pensions and Lifetime Savings Association (PLSA).

Of the schemes with a net-zero commitment in place, nine in 10 were targeting net-zero compliance by 2050.

Among those schemes, 14 per cent were aiming for 2035 and 18 per cent were working towards 2040 at the latest.

Of the schemes that do not have a net-zero commitment in place, 10 per cent expected to have one within two years, while 20 per cent anticipated having one in two or more years’ time.

Nearly two-thirds (64 per cent) felt their scheme had made ‘significant progress’ in playing it part in the net-zero transition, down from 70 per cent in the 2022 survey.

The proportion of schemes that stated their focus on ESG had been reduced due to other priorities, such as the cost-of-living crisis and market volatility, rose from 12 per cent in 2022 to 31 per cent in 2023.

Three-quarters (75 per cent) were concerned about recent news updates that suggested there was no sustainable pathway to limited global temperature rises to 2 degrees, with confidence in the UK meeting its climate targets falling from 59 per cent to 68 per cent over the past 12 months.

More schemes believed there were barriers the government could remove to help pension schemes in addressing climate change, up from 53 per cent to 67 per cent, while 69 per cent felt the government should be doing to more to help investors address climate risk, up from 56 per cent.

Meanwhile, three-quarters (75 per cent) of pension schemes believed asset managers’ ESG data had improved, while 57 per cent and 60 per cent felt asset managers and investment consultants had responded well to the challenges of improving climate reporting, respectively.

“We’ve tracked our members’ preparedness for net zero over a couple of years now and are really pleased to see their progress as data quality has improved,” PLSA deputy director – policy, Joe Dabrowski.

“The latest research indicates the window to limit global warming to 1.5˚C may be closing. This has grave consequences for society, pensions and savers.

“It’s crucial that the government delivers on its green transition strategy and avoids creating any uncertainty with mixed messaging on its climate and sustainability objectives.”

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