Climate initiatives intensify among UK trusts, yet they encounter criticism due to their continued involvement in fossil fuel investments
A new report by the campaign group Make My Money Matter, in collaboration with Dutch research organisation Profundo, has found that the UK's largest master trusts are making limited progress in phasing out fossil fuel investments. The report, titled the Climate Action Report, highlights that these pension schemes still hold considerable exposure to fossil fuel companies and lag behind other pension schemes in fully divesting or setting concrete timelines to eliminate such investments.
The report this year prioritises pension scheme members and focuses on the 12 largest DC master trusts by membership. Some of the largest players in this sector, including Aegon, Aviva, Fidelity International, Legal & General, Royal London, Standard Life, and Scottish Widows, continue to invest in ExxonMobil despite the oil giant's plan to increase its oil and gas output by 18% over the next five years. Seven out of the 12 providers surveyed maintain this investment, posing financial risks given increasing regulatory and market pressures for climate alignment.
The report reveals that pension providers received the weakest scores in their commitment to phasing out fossil fuels, with funds averaging 2.9 out of 10. This lack of commitment is a concern, especially as the oil and gas sector continues to invest billions in new developments, despite the International Energy Agency's 2021 demonstration that no new oil and gas fields should be developed anywhere in the world.
One of the largest master trusts, USS (Universities Superannuation Scheme), has reported around £2 billion invested in renewable energy and clean technologies as of March 2025, including a 50% stake in a solar farm operator. However, USS has not fully divested from fossil fuels but uses a criteria-based approach, excluding investments where thermal coal mining accounts for more than 25% of company revenue. The scheme commits to net zero by 2050 but acknowledges that more progress is needed to meet interim targets and that achieving net zero is a long journey.
While some master trusts are starting to integrate sustainability and net zero commitments, fossil fuel divestment is often partial and slow, according to the report. This cautious and gradual approach in these large pension schemes is a cause for concern, as it may not be enough to address the urgent need for climate action.
The report also notes that some providers, like Nest, Now: Pensions, Smart Pension, and the People's Partnership, are increasing their efforts to implement net zero pledges. In contrast, others, such as Standard Life and Royal London, continue to fail their savers, according to Tony Burdon, CEO of Make My Money Matter.
The report further highlights that some providers, including Aviva and Legal & General, voted with management 44 out of 45 times at the Shell and BP annual general meetings in 2024. This lack of opposition to fossil fuel investment strategies raises questions about these providers' commitment to climate action.
In summary, UK master trusts have begun steps towards fossil fuel reduction but currently fall short of full divestment or rapid phase-out. Their net zero ambitions typically align with 2050 targets, consistent with government commitments, but near-term fossil fuel exposure remains notable, reflecting a cautious and gradual approach in these large pension schemes. The report emphasises the need for more rapid and comprehensive action from UK master trusts to address the climate crisis and protect their members' investments.
[1] Sources: Make My Money Matter and Profundo's Climate Action Report 2025.
- The report suggests that although UK master trusts are taking steps towards fossil fuel reduction, they are still investing in fossil fuel companies like ExxonMobil, which plans to increase its oil and gas output by 18% over the next five years.
- The Climate Action Report indicates that the UK's largest DC master trusts have limited progress in phasing out fossil fuel investments, with some investments posing financial risks due to increasing regulatory and market pressures for climate alignment.
- The report underscores the need for more rapid and comprehensive action from UK master trusts, as their net zero ambitions often align with 2050 targets but near-term fossil fuel exposure remains notable, calling for greater efforts to meet interim targets and address the urgent need for climate action.
