Pension asset owners call on govt to adopt decarbonisation plans ahead of COP26

Pension asset owners, convened by the Principles for Responsible Investment (PRI), have urged the government to adopt a number of proposals to support decarbonisation ahead of COP26, also emphasising the role of private finance in this.

In a letter to the government, the group highlighted climate change as the "most significant global risk facing investors", emphasising that for beneficiaries, it also threatens their livelihoods, their retirement savings and their health.

"Even a short delay in implementing the necessary policies increases the likelihood of a disorderly transition, threatening beneficiaries’ savings and the resilience of the financial system," it stated.

Signatories of the letter were the Border to Coast Partnership, the Brunel Pension Partnership, BT Pension Scheme Management, LGPS Central, Local Pensions Partnership Investments, NILGOSC, RPMI and Unison Staff Pension Scheme.

In light of these concerns, they have requested a meeting with the government to discuss how the financial sector can contribute to the UK’s decarbonisation efforts, also emphasising the importance of using private finance amid the pandemic.

The letter stated: “With public budgets under continued strain from the Covid-19 crisis, now is the time to utilise the City of London and private finance to help deliver the ambitious decarbonisation needed.

“This can be done through co-designing dedicated investment funds, such as the Charging Infrastructure Investment Fund, and ensuring the new National Infrastructure Bank has a clear net zero and resilience mandate alongside supporting the levelling up and just transition agendas.”

Indeed, whilst the group also welcomed the government's recent 10-point plan, particularly regarding offshore wind and the ICE vehicle phase-out, it warned that “substantially more funding” will be needed match the scale of the transformation required.

Furthermore, it recommended that a net zero litmus test should be integrated into the government’s long-term strategies and targets, utilising private finance “where possible”.

In addition to this, the group called on the government to implement an early phase out date for internal combustion engine vehicles, also emphasising that as important as the date of the sales ban is the policies underpinning the tradition to zero-emissions vehicles (ZEVs).

As such, it has recommended a number of key principles for the government to integrate into its ICE phase out planning and Transport Decarbonisation Plan.

This included issues around price-parity, which it noted is not expected until the mid-2020s, and the potential for financial incentives to ensure consumers are not penalised for making sustainable choices.

It also emphasised the importance of a 'just transition', stressing that the Transport Decarbonisation plan should set out how workers and related service providers will be protected, the types of retraining to be provided, and tackle the affordability of ZEVs.

This follows the launch of an inquiry into responsible investment for a "just transition” to a net zero economy from the All Party Parliamentary Group for Local Authority Pension Funds.

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