The scale and urgency of the climate crisis and the action needed to tackle it means that robust plans to meet targets must urgently be put in place.

Our analysis* shows that investment from the private sector and the pensions industry can be crucial in funding the net zero transition. With the right reforms on the right terms for pension savers, UK pension funds could quadruple their investment in UK climate solutions to up to £1.2 trillion.

At Phoenix Group, we’re committed to advocating for the economy-wide change required to boost climate investment across the UK. Through our work with government, regulators and industry, we’re working to inform the conversation while always prioritising the best outcomes for our customers.

Our commitment

Scaling up investment in climate solutions is one of the key potential ways that we can help to achieve net zero. And with 12 million customers and close to £0.3 trillion assets under administration, our scale means we can make a real difference.

One of the central pillars of our transition plan is using our scale and voice to drive wider system change to help establish the right policy, regulatory and market conditions to achieve net zero. We are working to achieve this through a combination of thought leadership, collaboration, and engagement with government, regulators and industry to take forward the priority strategies to unlock investment.

How does this impact our customers?

As providers of pension and savings solutions, our primary focus is always to deliver good financial outcomes for our members and customers.

Our research^ tells us that our customers are concerned about climate change and expect us to invest their money in a responsible way; and as a result, we have made managing exposure to climate risk part of our approach. By taking the right actions to decarbonise and navigate the transition to net zero, we can help pension savers grow their investments and protect them against the financial risks of climate change.

Challenges we need to address

Our Unlocking Investment in Climate Solutions report identified that there are two key barriers inhibiting progress to unlocking investment:

  1. Demand for finance - scarcity of investible and scalable opportunities - for example, many climate solutions face high levels of bureaucracy in permission processes or tend to be heavily fragmented rendering them less amenable to scaling, while an absence of clear national transition plans also inhibits action. 
  2. Supply of financing - regulatory constraints on UK pension industry - for example, liquidity constraints and fee cap for Defined Contribution (DC) schemes limit the appeal of illiquid long-dated investments, which many climate solutions are. 

Solutions to barriers

We propose four priority strategies in the short term that should form the focus for the government, regulators and pensions industry to unlock investment:

To address demand for finance: 

  • Developing a UK climate transition plan with sector-specific strategies and clear roadmaps
  • Supporting regions across the UK to unlock investment through capacity building and innovate financing models to support decarbonisation at a local level 

To address supply of financing:

  • Provide clarity and support to industry on considering climate impact as part of fiduciary duties
  • Deliver matching adjustment reform (Solvency UK), with guardrails linked to productive/sustainable finance

Our journey to net zero

Achieving net zero by 2050 remains a huge challenge and will require a step-change in collective action and investment.

That’s why taking bold action to advocate for necessary system changes and engaging with government, regulators and industry is crucial. It demonstrates leadership and shows that we are willing to walk the walk.

We hope to use this work as a platform for further thought leadership, engagement and, crucially, collaboration that will help to drive necessary system change as we continue on our journey towards achieving net zero and simultaneously helping our customers secure a life of possibilities.

  • *Unlocking Investment in Climate Solutions report
  • ^ Research conducted via an online survey with 2,052 customers across our Standard Life, Phoenix Life and ReAssure brands. Data weighted to reflect the distribution of customers across our brands (effective total base = 1,752). Fieldwork: 24th January-9th February 2024.