Opperman: 'Some people want me to be less of an innovator'

Speaking at the Pensions and Lifetime Savings Association (PLSA) investment conference today (12 March), the pensions and financial inclusion minister said schemes needed to up their action with robust measures.

"It's quite clear we are facing a very serious issue," he said.

"If you work in pensions and savings, that starts with believing in the long-term and if you aren't paying attention to climate change, you aren't thinking long-term.

"Climate is the most important risk of the 21^st century. It is not just unprecedented, but irreversible, and I make no apologies for the government taking it so seriously. We are looking at cross-government approaches and everyone is likely to find significant changes in how this country is governed."

His comments came as a cross-industry taskforce, backed by the Department for Work and Pensions, launched a consultation on guidance for pension schemes relating to stricter climate-related financial disclosures.

Opperman said he will used increased powers outlined in the Pension Schemes Bill to continue to influence scheme reporting that aligns with the Paris Agreement initiatives.

"Understanding what good looks like will be one of the most difficult issues going forward, but it shouldn't stop [schemes] from starting their processes now," he said.

"We all come from different standpoints of awareness but trustees absolutely should not underestimate their power. This can be directed at asset managers and they must question what they hold in investment portfolios and why anything they may invest in is high risk".

To help combat climate risk on investment prospects, Opperman said trustees must be prepared to get "intelligent, non-greenwashed answers" on risk management.

He said: "If a manager can't answer these ESG questions, they should be rightly dismissed and trustees should go to someone else.

"It's not about divestment anymore, this is about active management and change for the greater good."

Opperman added that boosting competition across the industry would also help drive innovations which could protect savers.

"We want to help people save the best they can for retirement, encouraging personal responsibility and a strong dose of competition that we do want to encourage right across and through the investment chain.

"Some people want me to be less of an innovator, but I need to support what schemes do as well as the members they represent and set out ambitious programmes with real outcomes."

Opperman said the implementation of the bill and "firing up the regulator" to take new approaches would be a first measure.

"It's about possible funding changes and implementing the pensions dashboard and I look forward to seeing the bill's progress when I steer it through the House of Commons after Easter."

Opperman said his office's aim was to have the bill made law by the end of the summer term in mid to late July.

This comes after the PLSA's February warning that amendments to the bill could hand the government "unprecedented" powers over schemes' decision making and go too far in forcing schemes to report on climate-related investment.