UK pension schemes have more than £10.5bn invested in companies that are extracting or burning thermal coal overseas, according to new research.

The study, conducted by Finance Innovation Lab (FIL) and the Leave it in the Ground initiative (LINGO), analysed 22 randomly selected funds across three major UK pension providers and found the majority retained exposure to coal.

The annual greenhouse gas emissions associated with UK pension investments in coal-related companies was estimated to be at least 17 million tonnes of CO2, which the report said was comparable to the reduction seen in the UK power sector between 2019 and 2025.

FIL and LINGO warned that continued investment in coal exposed pension savers to growing financial risks and undermined the UK’s ‘international climate leadership’.

The organisations argued that government intervention to require pension schemes to end investment in thermal coal was a necessary and proportionate step, which could be achieved through the Pension Schemes Bill.

Members of the House of Lords are set to continue debating the Pension Schemes Bill, including a proposed amendment that would require schemes to divest from thermal coal.

House of Lords member, John Sharkey, who tabled the amendment, commented: “The UK is rightly proud to have eliminated coal from our own energy mix. It is absurd that our pension funds continue to finance its expansion and use overseas.

“Coal is hugely destructive for the climate and nature, and it is also a risky investment. Divesting from thermal coal is in the interests of both pension savers and the planet.”

FIL head of advocacy, Marloes Nicholls, added: “People want to retire with a decent income and a liveable planet, yet our research shows pension providers are continuing to invest savers’ money in industries that threaten both.

“We hope the government will listen to the growing call to move UK pensions out of coal once and for all.”

A LINGO spokesperson said that while they anticipated some pension schemes would still be invested in coal, they were surprised to find it “remains the norm” across much of the sector.

“Limited disclosure makes it difficult to calculate the full scale of the problem, which just underlines the urgent need for greater transparency,” they continued.

“Pension savers have a right to know how their money is invested - and a right to expect that it won’t be harming their own long-term interests.”

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