UK pension schemes should be subject to mandatory net-zero plans and will miss an opportunity if they wait until any such plan is implemented, according to COP26 High Level Climate Action Champion, Nigel Topping.

Speaking on a live webcast hosted by Isio, Topping said the UK pensions industry must “wake up” and ensure that the nation’s £3trn of pensions assets are invested sustainably, commenting that employees and investors would be disappointed if schemes fail to take action until they are forced to do so.

He also called on Local Government Pension Scheme funds and schemes sponsored by companies that had already committed to net-zero targets in particular to face mandatory targets.

Topping said the choices investors make over the next decade were key if the world is to “limit global heating, reverse the destruction of the natural environment and meet the UN Sustainable Development Goals”.

He raised concerns about low levels of understanding in parts of the pensions industry, which he said often led to trustees being “bamboozled” by climate terminology, and argued that good advice was vital to ensuring that the industry “woke up” to accept climate change as a fundamental economic issue.

Isio CEO, Andrew Coles, said: “To drive real change, we need sponsors and trustees to work together on the sustainability agenda in pension schemes. Too many corporate boards have great focus on the environmental impact of their operating business but only a passing interest in the pension trustee’s sustainability agenda.

“Equally, trustees are missing opportunities to access the expertise, knowledge and skills that exist in their sponsor’s business. It’s in everyone’s best interests for both the short and long term, to understand each other’s agenda, objective and philosophies to, as Nigel stated, ‘keep hope alive’ and make a difference.”

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