Climate risk rockets as fossil fuels favoured

Written by Lori Campbell on 1st Sep 2020

The risk of climate change has rocketed up the agenda for European pension funds in the last 12 months, as only one in 10 energy firms are found to prioritise renewables over fossil fuels. Meanwhile, Tandem Bank hits a major new milestone in its bid to become the UK’s first digital green retail bank, Warrington Borough Council launches a resident-funded green bond, and the plastic bag charge is set to double to 10p. It’s the Good With Money weekly newsbrief. 

 

Climate risk rockets up agenda for pension funds

More than half of European pension funds now consider climate change a major risk, reveals a new survey.

The poll by consultant Mercer found 54 per cent of pension schemes actively consider the impact of climate change-related risks on their investments – a dramatic rise from just 14 per cent in 2019.

The vast majority (89 per cent) now consider wider environmental, social and governance (ESG) risks as part of their investment decisions, up significantly from 55 per cent last year and 40 per cent in 2018.

“In a year that saw activist Greta Thunberg, with others, organising global school strikes to raise climate change awareness and witnessed vast swaths of the world on fire,” said the report, “it is not surprising that a growing number of investors are considering the investment risk of climate change.” The data was collected before the Covid-19 pandemic took hold.


Find out how Good YOUR pension is in our Good Guide to Pensions


 

Only 1 in 10 global energy firms prioritise renewables

Just one in 10 of the world’s electric utility companies are prioritising investment in clean renewable energy over growing their capacity of fossil fuel power plants, according to research from the University of Oxford.

The study of more than 3,000 utilities found most remain heavily invested in fossil fuels despite international efforts to reduce greenhouse gas emissions, and some are actively expanding their portfolio of polluting power plants.

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The majority of the utility companies, many of which are state-owned, have made little change to their generation portfolio in recent years.

Only 10 per cent of the companies in the study, published in the research journal Nature Energy, are expanding their renewable energy capacity at a faster rate than their gas or coal-fired capacity.

Of the companies prioritising renewable energy growth, 60% have not stopped concurrently expanding their fossil fuel portfolio and only 15 per cent of these companies are actively reducing their gas and coal capacity.


Renewables top investors’ wishlist in 2020


Tandem hits milestone in bid to be UK’s first digital retail bank

Tandem Bank has acquired Allium Lending Group as part of a £60 million fundraising deal that will propel its bid become the UK’s first green digital retail bank.

Allium enables customers to make their homes to more energy efficient and environmentally-friendly by financing everything from home insulation, energy efficient boilers and double glazing, to solar panels, heat pumps and home charging stations.

Tandem is set to introduce new green savings and green mortgage products, together with new digital solutions for customers to reduce their environmental impact.

Allium’s CEO Paul Noble, who will join the Tandem executive team, said: “The combination of Allium and Tandem will create the ability to rapidly scale a green banking proposition and help more customers access green finance products.”


What you need to know about: Tandem Bank


Council launches resident-funded green bond in bid to hit net-zero

Warrington Borough Council has launched a green bond for residents to invest in local renewable energy and energy storage as part of its bid to be carbon neutral by 2030.

Developed by Abundance, the bond aims to raise £1 million to help finance the region’s growing solar and battery storage sectors. It follows West Berkshire Council which launched the UK’s first local government green bond last month.

Warrington Borough Council is developing two industrial-scale solar farms and a 27MW battery storage facility in partnership with Gridserve. They are expected to generate more energy than the council consumes annually, and any surplus will be sold on the open market.

With a minimum investment of £5, the Community Municipal Investment (CMI) bond has a five-year term and will pay investors 1.2 per cent per year, on a twice-yearly basis. Abundance claims the bond, which is also open to private investment firms and those living outside the local authority’s constituencies, has a lower risk profile than its wider portfolio.

Warrington Borough Council has halved its own emissions since 2009 and is now working towards a new climate strategy, headlined by a 2030 net-zero target.

 

Plastic bag charge to double from next year

The charge on plastic bags is to double to 10p from next April in a further bid to tackle plastic pollution.

The bag tax will apply to all small shops, markets and takeaways in England.

The initial 5p tax resulted in the number of single-use carriers issued by the major supermarkets falling by a massive 96 per cent. The scheme, which currently applies only to retailers with more than 250 staff, will be extended to small firms.

Takeaways, markets and airport duty-free shops will all be covered by the charge, as well as corner shops and small high street retailers.

Ministers hope the move will lead to a major reduction in the 3.6billion plastic bags given away each year.