Pension schemes are "skirting" climate change duties despite new reporting regulations, according to ShareAction.

In an analysis of 16 of the largest UK pension schemes, just two schemes were directly engaging with large global companies on their role in the climate crisis, Nest and TPT Retirement Solutions.

ShareAction has stated that “the vast majority are falling short” on climate change duties, despite new regulations introduced from 1 October 2019 which require schemes to publish policies on how they specifically incorporate climate change and other environmental, social, and governance (ESG) issues.

Nest, TPT and The Peoples’ Pension were the only schemes to go into depth on climate change within these ESG policies, acknowledging the need for robust engagement with companies in their portfolio to reduce their carbon emissions.

ShareAction’s analysis has ranked schemes into four categories based on their incorporation of ESG and climate related factors: leading; implementing; building, and learning.

Nest, who published its’ responsible investment report outlining plans to boost its climate change strategy this morning, is the only scheme to have fallen into the leading category.

Now: Pensions was placed into the ‘learning’ category, while a further eight schemes were scored as ‘building’, meaning they are showing signs of incorporating ESG within investment strategies but limited action on climate change.

The survey also found that many of the lower scoring master trusts are “over-reliant” on providers or the sponsoring employer for direction on ESG and climate change issues.

ShareAction raised concern at the number of master trusts delegating responsibility for voting their shares and climate engagement activity to their asset managers, emphasising that without direction from the asset owners, these managers are free to vote in ways that may not fall in line with the schemes’ ESG policy.

However, the analysis did also find an increase in the amount of ESG and climate focused funds incorporated into master trusts’ default asset allocation.

ShareAction campaigns manager and author of the report, Lauren Peacock, said: “Millions of savers are putting their life savings into the hands of pension funds who are playing a dangerous game with it.

“By passing the buck on climate change, they give little comfort that the world and their savings will be protected come retirement. Younger savers are beginning to connect the dots between their personal finances and their impact on the planet.

“We hope these master trusts sit up and listen to these findings before it’s too late.”

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