UK pension scheme investments enable the release of around 330m tonnes of carbon every year, according to analysis from Make My Money Matter (MMMM) and Route2.

The research revealed that this estimated output is more than the UK’s entire annual CO2 emissions, noting that, if the pensions industry were a country, it would find itself in the top 20 carbon emitters globally.

The report also found that around half of the UK’s entire landmass would need to be reforested to offset these estimated emissions.

Investments in the fossil fuel industry were a key factor in contributing to emissions, with the analysis revealing that for every £1,000 invested by UK pension schemes, £60 is thought to be invested in the fossil fuel industry.

Whilst progress is being made, recent research from MMMM also found that around £2trn of pension scheme money is still not yet aligned with the Paris Climate Agreement, with 71 out of 100 major UK pension schemes yet to make robust net-zero emissions commitments.

In light of the findings, MMMM has reiterated its call for the government to make net zero mandatory for all UK Pension schemes and providers at COP26, to further build on the recently announced plans for greater climate disclosures and the government’s Roadmap to Sustainable Investing.

The campaign group argued that regulatory action is the only way to ensure that the appropriate speed and scale is used to significantly reduce the emissions of the pensions industry and limit global warming to the "all-important 1.5-degree target".

MMMM co-founder, Richard Curtis, commented: “When you think about pensions, you hardly ever think carbon emissions. But our report turns that on its head.

“With pensions enabling emissions which exceed the UK’s entire CO2 output, the message couldn’t be clearer: the time for green pensions is now. Because if we fail to lower the emissions of our pensions, we will fail to prevent the worst effects of catastrophic climate change; jeopardising the very futures our pensions should be saving for.

“So, with COP26 just days away – the most important climate talks of our generation – we must put our pensions industry to work on tackling climate change by lowering their emissions, and using their pension power to transform the companies they invest in.

“While we’ve seen green shoots of progress with voluntary net-zero commitments, £2trn remains in schemes which have failed to act, undermining the UK government’s own net-zero targets.

"That's why we believe it’s time for the government to make net zero mandatory for all pension schemes, and make sure the trillions in our pensions helps tackle the climate crisis, not fuel the fire.

“In doing so, we can lead the world on sustainable finance, take advantage of the enormous opportunities of the green industrial revolution, and ensure that everyone, everywhere, has a pension to be proud of.”

Route 2 founder, Daniel Dias, added: “While pension funds do not directly produce significant greenhouse gas emissions, the way they allocate their capital has a significant impact on the long-term behaviour of the companies and countries they invest in.

“Our analysis has shown that, because of the vast sums of money that they are responsible for, the levels of GHG emissions that they have influence over is significant. It also demonstrates that selecting pension schemes that are more climate sensitive is an effective tool in combatting climate change.”

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