Majority of pension funds have net zero commitment, but challenges persist in meeting climate and nature targets

• Net zero alignment: 65% have a net zero commitment in place; among the third who do not around one in five expect to implement one within five years.
• Challenges: 59% cite the lack of high-quality data, and 55% highlight uncertainty around government policy as major barriers.
• Nature-related disclosure knowledge: Only 17% of organisations are highly familiar with TNFD recommendations, with data access (83%) being the top challenge in their implementation.
• PLSA publishes new guide to help pension schemes with challenges associated with nature and biodiversity loss.

Sixty-five percent of pension funds surveyed by the Pensions and Lifetime Savings Association (PLSA) have a commitment to net zero in place. Among the third who do not, one in five (22%) anticipate adopting a commitment within five years.

Among the schemes with a net zero commitment, nearly a quarter (23%) aim to achieve net zero by 2040, while a majority (44%) expect to reach this target between 2040 and 2050. Despite these ambitions, the survey highlights several critical challenges hindering progress. The lack of high-quality data (59%) and uncertainty regarding future government policies (55%) are seen as significant challenges. Additionally, a third of respondents cite regulatory uncertainty and limited investment opportunities in low-carbon assets (35%) as further obstacles.

However, organisations are actively implementing strategies to meet their climate objectives. An overwhelming 90% of those with a net zero commitment are engaging with companies to reduce emissions, while 80% are investing in renewable energy. Other initiatives include enhancing energy efficiency in real estate investments (53%) and divesting from high-carbon assets (41%).

Just over three quarters of the respondents (76%) voiced support for the development and implementation of credible transition plans aligned with the 1.5°C target set by the Paris Agreement.

While progress on climate-related goals is advancing, more attention is now being put on biodiversity and nature-related issues.

Pension funds’ knowledge of the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) remains limited, with only 17% of respondents reporting a strong familiarity with its recommendations.

This gap underscores the importance of frameworks like the Kunming-Montreal Global Biodiversity Framework and the Taskforce for Nature-related Financial Disclosures (TNFD), which aim to address these challenges.

The PLSA survey highlighted several significant challenges in implementing TNFD recommendations and addressing biodiversity more broadly. Key barriers include setting measurable biodiversity targets (77%) and navigating the complexity of identifying and assessing biodiversity-related risks (68%).

Despite these challenges, 73% of organisations planning to adopt TNFD recommendations aim to do so within the next five years, indicating a strong long-term commitment to addressing biodiversity and nature-related risks.

To better help with enhancing pension schemes understanding, the PLSA has created a guide, Nature’s Impact – Why Biodiversity Loss Matters to Pension Schemes and What to Do About It. It explains the interconnected but distinct concepts of nature and biodiversity, highlighting the financial and environmental risks posed by biodiversity loss. These risks impact pension schemes through cost implications and the long-term financial wellbeing of pension scheme members.

Recognising the complexity of nature compared to climate, the guide provides five key steps for pension schemes:

1. The importance of engaging with training opportunities.
2. The need to conduct portfolio assessments.
3. The importance of engagement and stewardship.
4. Engaging with the range of nature-based investment opportunities available.
5. Considering policy advocacy and target-setting exercises.

The guide also addresses overlaps with the Taskforce for Climate-related Financial Disclosures (TCFD), providing ways to integrate climate and nature reporting without increasing administrative burdens. Case studies highlight best practices across PLSA members.

By aligning actions with climate goals and offering practical guidance, the PLSA enables pension schemes to address biodiversity loss effectively and work towards sustainable, nature-positive outcomes.

Joe Dabrowski, Deputy Director of Policy at the PLSA, said: “Having tracked the progress of our members, it is promising to see the commitment towards achieving net zero has remained, with more organisations moving from intent to implementation of their plans.

“However, as investors and the economy work more widely towards a net zero future, the survey underscores the need for greater clarity, improved data, and stronger government support to overcome the challenges ahead. Action on biodiversity lags behind climate efforts, though frameworks like TNFD aim to bridge this gap. Our guide highlights practical steps, case studies, and links to climate reporting, urging members to proactively address biodiversity to safeguard long-term financial and ecological stability.”

Mark Smith, Head of Media Relations
020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]