UK pension schemes are making progress towards net zero alignment but a majority say there are still obstacles the government could remove to assist their work to address climate risk.

That’s according to a survey conducted by the Pensions and Lifetime Savings Association (PLSA).

It showed that six in 10 UK schemes have a net zero alignment in place, with most schemes saying their scheme or fund has made significant progress in the transition to a net zero society (70%).

However, one in 10 said their focus on ESG has been reduced as a result of recent economic developments, such as the cost-of-living crisis and market volatility.

Schemes that did not yet have a net zero commitment in place said this was largely to do with the difficulties of comparing like-for-like data received from investment companies and wanting to ensure their commitment is robust.

Most respondents (59%) are not confident the UK will meet its climate target (59%), and most are concerned with recent updates which suggest there is no sustainable pathway to achieving warming of less than 2 degrees C (74%).

Pension schemes are calling on the government to progress its Green Finance Strategy, progress and finalise the UK green taxonomy, ensure climate reporting is embedded across the investment chain (at present many of the largest employers remain outside of scope) and accelerate efforts to make the City of London the world’s first net zero financial centre.

Nigel Peaple, director policy & advocacy, PLSA, said: “The pensions sector plays a key role in ensuring the world meets its commitment to minimise global temperature increases to 1.5 degrees and in leading the financial sector to this goal.

“Many pension funds have already made a commitment towards achieving net zero and we expect more will choose to do the same in the near future.

“Government has an important role to play in helping pension funds achieve their net zero targets, by actions such as adopting a clear strategy on sustainable energy security and helping set and define meaningful standards for ESG measurement and reporting. We ask Government to prioritise these actions.”