UK pension schemes cut carbon as politics blows hot and cold
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The majority of UK pension providers have continued to make meaningful progress in slashing the carbon footprint of their default funds, according to the latest research detailed in the Benefits Expert Guide to Sustainable Workplace Pensions.
Progress comes despite a revival of sceptical views on climate change following Donald Trump’s return to the White House.
The exclusive data shows that the average emissions intensity across 19 major defined contribution (DC) pension schemes fell by 19.3 percent in 2024 compared to the year before. Providers such as NatWest Cushon and The People’s Pension are leading the way, with the lowest carbon footprints among their peers. LifeSight currently tops the table for emissions, but it is also part of a sector-wide push to meet interim 2030 targets that aim to halve portfolio carbon intensity.
For HR professionals, this is more than a box-ticking ESG exercise. A provider’s stance on climate risk and stewardship has direct implications for employee engagement, benefits strategy and long-term savings outcomes. Eleven DC providers are now applying dedicated ESG strategies across their default funds, with more than three-quarters incorporating ESG tilts or screens into at least 70 percent of their portfolios.
But the picture isn’t without complications. The research reveals a gap between European and US-based asset managers when it comes to net zero ambition. Some asset managers have yet to set any portfolio-level emissions goals, citing client mandates as a reason. This raises important questions for employers and trustees, particularly around governance, voting rights, and influence over ESG strategy in pooled pension default funds.
Interestingly a substantial proportion of DC providers said they would consider ditching an asset manager that fails to meet its climate targets. This could be a sign that future divestment may hinge more on misaligned stewardship than just sector exposure.
This year’s guide suggests that sustainable pensions could soon be a default expectation, not a niche option. But it also warns that if emissions aren’t curbed globally, schemes may have to pivot from transition strategies to climate adaptation.
For more on why sustainable workplace pensions matter, how your DC pension scheme is performing, and what is coming next in terms of pensions decarbonisation, download the Benefits Expert Guide to Sustainable Workplace Pensions July 2025.
CLICK HERE TO DOWNLOAD YOUR COPY OF THE BENEFITS EXPERT GUIDE TO SUSTAINABLE WORKPLACE PENSIONS 2025
