Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, whether her Department plans to issue guidance to pension funds on reducing the proportion of their funds invested in the fossil fuel industry.

Pension funds have a duty to manage investments in the best long-term interests of their members, which includes decisions concerning investments in fossil fuels. Occupational pension schemes are required to make climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Schemes should also set out their stewardship approaches to voting and engagement in the Statement of Investment Principles and Implementation Statement. Schemes voluntarily signed up to the Financial Conduct Authority’s Stewardship Code can also publish an additional Stewardship Report. TCFD reports and information about stewardship increasingly provide evidence of how schemes are managing climate risks and actively engaging with companies to reduce exposure to fossil fuels. Trustees may decide to divest from fossil fuel companies, or funds with high carbon exposure, particularly where sustained engagement efforts do not achieve satisfactory outcomes.

My Department has issued statutory guidance for trust-based schemes, which trustees must have regard to. The guidance aims to support trustees in their efforts to meet their climate reporting and governance duties. The Pensions Regulator (TPR) also provides detailed guidance to support trustees address climate-related risks and provides feedback to the industry on areas for improvement. Information from the Financial Conduct Authority (FCA) is available to support FCA-regulated pension providers.