What assessment has the Minister made of the latest divestment status of Welsh public sector pension funds and of the steps that are being taken as a result of a commitment to the divestment of Welsh public sector pension funds?
I wrote to all local government pension fund managers in April 2019 to ask how they were developing their investment strategies to respond to climate change including their plans for disinvestment from the fossil fuel sector or active engagement with funds to achieve carbon positive investment plans.
The responses indicated that all schemes across Wales were aware of their obligations to consider environmental and social factors as part of their investment decision-making in the context of their fiduciary duty. As an example, Torfaen pension fund has made a major switch of funds into a low carbon index tracker fund designed to reduce the carbon exposure on that part of the fund by 80%.
The Welsh Government does not have legislative competence in this area but the move to disinvestment from fossil fuels will be further strengthened by the UK Government’s Pension Schemes Bill, which completed its passage through the House of Lords on 15 July and will now be considered by House of Commons.
The Bill will ensure occupational pension schemes take climate change into account as both a risk and an opportunity, and compel trustees to disclose how they have done so to their members and the public. It also contains a requirement for schemes to take the government’s net zero targets into account, as well as the Paris Agreement goals of limiting the rise of average global temperatures, for the purposes of managing their own climate risk.