Only a small number of FTSE 100 firms’ pension schemes have shifted their investment approach to take account of climate-related risks, ShareAction research finds

The retirement savings of hundreds of thousands of workers could be “highly exposed” to climate-related risks, with some of the UK’s biggest company pension schemes sticking with investment strategies that fail to address exposure to carbon intensive assets.

That is the key conclusion from research by ShareAction published today which warns companies are failing to match their sustainability efforts with ‘climate-safe’ pensions for their staff. There is a frequent disconnect, the report argues, between company commitments on tackling climate change, and the level of climate risk protections afforded to their employees’ savings through corporate pension schemes.

The findings are based on a survey of 25 FTSE 100 companies with some of the largest defined contribution (DC) pension schemes. The analysis includes a host of big corporate names, including Barclays, Lloyds, Tesco, Unilever, Rolls-Royce, and Diageo. It was carried out by ShareAction to assess how the companies’ pension schemes seek to protect staff savings against climate-related financial risks.

A growing number of institutional investors fear that many listed companies, especially in carbon intensive sectors, are exposed to a wide range of climate-related risks, including the increased risk of physical climate impacts such as storms or droughts and so-called transition risks, whereby the shift towards clean technologies leads high carbon assets stranded and over-valued.

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