"Moving to net zero will protect savings against climate-related risks and uncertainty and offer longer-term sustainable growth by accessing low carbon transition opportunities."
Scottish Widows has become the first major pensions and insurance provider to target halving the carbon footprint of all its £170bn investments by 2030 in its path to becoming net zero by 2050.
The company will also be investing billions of pounds in climate solutions, such as renewable energy, low carbon buildings, and energy efficient technologies by 2025.
The move almost doubles the meaningful commitments the pension industry has pledged to reaching net zero targets, in line with the goals of the Paris Agreement.
The pensions firm is now calling on the rest of the industry to urgently close the £2.17trn ‘green gap’ and commit to net zero with a clear path to get there ahead of the COP26 global conference on climate change later this year.
Maria Nazarova-Doyle, head of pension investments at Scottish Widows, said: “Our first responsibility is always to our customers and ensuring we are looking after their investments for the long-term. Moving to net zero will protect savings against climate-related risks and uncertainty and offer longer-term sustainable growth by accessing low carbon transition opportunities.
“To get there we must set shorter-term targets. Carbon emissions need to halve between now and 2030 or we won’t stand a chance of meeting the longer-term net zero goal.
“To do the job properly across all our products and investments, we’ll use our influence through stewardship activity to drive the transition to a low-carbon future in the real economy, while proactively investing in climate change solutions.
“The journey to net zero will not be easy but we are up for the challenge. A company of our scale cannot rely on mass carbon offsetting schemes to provide a false sense of security, or extensive exclusion lists to get results. Action that drives change in the real economy is the only way we can achieve the net zero goals.
“The pensions industry holds trillions of pounds worth of investments and can play a game changing role in supporting the global economy’s transition to a low carbon future, while earning sustainable returns for pension savers.
“We are making steady progress as an industry, but it’s not fast enough. The reality is we still have a very long way to go to close the green gap to net zero. To help prompt the shift to a low carbon economy, others within our sector must also make meaningful, large-scale net zero commitments that include a dramatic reduction in emissions, if we were to have a chance to get to Net Zero by 2050.”
Anne-Marie Trevelyan, Energy and Clean Growth Minister, said: “Eliminating the UK’s contribution to carbon emissions requires urgent action across society and the whole economy.
“Scottish Widow’s fantastic commitment will help create meaningful, large-scale change across the financial sector, positioning the UK as the global centre for green finance while protecting customers and the environment from climate change.”