The Hidden Reason US Pensions Still Back Fossil Fuels

Caroline Escott, Railpen: Stewardship as a Returns Question

What does it actually take to move a system? In this episode of Risk, Return & responsibility Caroline Escott, Head of Investment Stewardship and Co-Head of Sustainable Ownership at Railpen, joins us to explain how one of the UK's largest pension schemes turns its position as a universal owner into influence, and why every bit of that work begins and ends with financial outcomes for members.   We cover the trustee mandate and investment beliefs that frame Railpen's priorities; the three pillars of its Sustainable Financial Markets agenda, namely shareholder rights, board effectiveness and external audit; and the practical craft of stewardship, from picking the jurisdictions and systemically important companies where influence travels furthest, to the under appreciated discipline of audit. Caroline is candid on the mechanics of investor coalitions, including the antitrust caution now shaping behaviour in the United States, and on the Investor Coalition for Equal Votes, the $4.5tn group Railpen co founded and chairs, as it engages founder led firms long before they reach the market. She closes with a generous, practical guide to public policy engagement for asset owners of every size.   A conversation for trustees, heads of DC, scheme managers and provider strategists who want to understand how stewardship earns its place in the return equation.   Listen now, and find the full video and our written feature at assetownernetwork.com.

The US Seeks Answers

The US Seeks Answers Guy Opperman, David Harris and Mike Ambery on Trump's pensions revolution, and what UK and European asset owners ought to do about it. Hosted by Stuart Hall.   David and Mike were in Washington and Des Moines last month. They came back with a story worth hearing.   In the US, ESG as a label is finished, the Department of Labor is opening 401(k) defaults to private credit and alternatives, and the administration is moving at a pace that makes the UK look, frankly, slow. Guy borrows Tony Blair's image of it: faced with a wall, the UK stops, reverses and thinks about it for two years; Trump puts his foot down and goes through it. Guy's own £25 billion of HS2 road money, bogged down in climate litigation, makes the point sting.   David is sharper still on the home front. He calls the interim Pensions Commission report "light and fluffy" His warning on Middle Eastern sovereign wealth quietly going home to rebuild is the line trustees should sit with. Mike pulls it back to where the money actually goes. The US is laser-focused on one thing: returns for the member, and the courts now back that up. ESG language is out; energy security, defence and infrastructure are in. The opportunity has not gone; the framing has changed, and European asset owners need to read that correctly.   Plus: the masculinity vote and the Trump base wanting Bitcoin in their 401(k). Kate Bingham's quiet observation that not one UK pension fund backed her healthcare business. A 1% EIS style allowance for pension funds that nobody is talking about, and Guy on whether Trump will really build "super, just like the Australians." His answer is worth the wait.   Chapters 00:00 Boots on the ground in Washington and Des Moines 05:30 The sole purpose test and the end of ESG in US defaults 08:30 Masculinity, Bitcoin and the Trump base 12:00 Geopolitics and Middle Eastern sovereign wealth 22:00 Why the US gets on with it and the UK does not 26:30 The "light and fluffy" Pensions Commission 32:00 Energy security and defence as the new ESG 46:00 EIS for pension funds and the missing product set 55:00 Trump's Aussie super dream, and decumulation   Hear all three in person at Private Markets Live 26, Stationers' Hall, London, 30 June. Asset owners attend complimentary. Link below. https://assetownernetwork.com/events/private-markets-live-26

The Hidden Reason US Pensions Still Back Fossil Fuels

Risk, Return and Responsibility - Episode 10 What if doing the responsible thing with your pension wasn’t about values at all - but about returns, risk, and reality?  Risk, Return and Responsibility, former UK Pensions Minister Guy Opperman and Chris Hall, Editor of Asset Owner Network, sit down with Alex Wright‑Gladstein, Founder and CEO of US fund provider Sphere, to unpack one of the most misunderstood forces in modern finance: why almost all US pensions still fund fossil fuels, and why this is a fiduciary failure, not a moral choice.  Alex explains how a system designed decades ago now traps trillions of dollars into outdated assumptions, why climate‑friendly investing has been framed as “financially irresponsible”, and how lawsuits, not performance - quietly dictate where retirement money flows.  This conversation goes far beyond ESG buzzwords. It’s about risk, power, incentives, and who really decides what “prudent investing” means.  If you’ve ever been told you have to choose between returns and responsibility, this episode challenges that idea entirely.    What You’ll Learn  * Why most Americans want climate‑aligned investing - but think they’re alone  * How pension fiduciary law in the US actively blocks innovation  * The lawsuit culture shaping what can and can’t appear in retirement plans  * Why fossil fuels have been one of the worst‑performing sectors for decades  * How excluding fossil fuels can actually reduce long‑term risk  * The uncomfortable truth about shareholder voting and conflicts of interest  * Why the ESG backlash wasn’t grassroots - and who funded it  * What a climate‑friendly index fund must do to survive regulatory scrutiny  * Why “doing nothing” with pensions is still an active choice    Stand‑Out Quotes  “You don’t have to choose between doing good and doing well - that choice was manufactured.”  “Most people don’t know what ESG means - but they know they’re worried about their future.”  “The default option quietly decides the fate of trillions of dollars.”  “Climate risk is financial risk. The law just hasn’t caught up yet.”    Why This Episode Matters  Pensions are the largest pool of long‑term capital in the world - and most people never realise where their money ends up.  This episode exposes:  * How systemic risk is ignored by design  * Why default funds matter more than individual choice  * How incentives shape markets far more than intentions  It’s not a debate about politics or ideology.  It’s a conversation about reality, responsibility, and the future we’re accidentally funding.    Who This Episode Is For  * Pension trustees & asset owners  * Policy makers & regulators  * Institutional investors  * Anyone with a pension who’s never been asked what it supports

Risk, Return and Responsibility – Episode 9: Reaching Common Ground on Natural Capital

In this episode, Rebalance Earth’s Rob Gardner explains why institutional investors must view nature as "living infrastructure" to mitigate systemic climate risks and secure long-term, performance-linked returns. Risk, Return and Responsibility — the monthly podcast from Sustainable Investor — provides institutional asset owners with the news and views shaping the sustainable investment landscape and our wider economic and social systems. Recorded in the first week of March 2026, this episode features former UK pensions minister Guy Opperman and Sustainable Investor Editorial Director Chris Hall in conversation with Rob Gardner, CEO and Co-founder of Rebalance Earth. Gardner discusses his own transition from traditional investment consulting to becoming a "natural capital champion”, arguing that restoring nature is a matter of economic self-interest. The discussion delves into how nature-based solutions can outperform engineered alternatives in managing physical climate risks, while also delivering returns to institutional portfolios. With reference to several of Rebalance Earth’s own projects, it outlines how capital flows for nature protection and restoration can be unlocked through aligning shared commercial interests, but does not shy away from the complexity of working with multiple parties, and the need for greater public-private understanding – and action - common challenges. Guests * Rob Gardner: CEO and Co-Founder of Rebalance Earth * Guy Opperman: Former UK Pensions Minister and host * Chris Hall: Editorial Director of Sustainable Investor Interview Highlights * Nature as Living Infrastructure: Gardner argues that nature restoration must be viewed through the lens of economic self-interest and "team Earth's" resilience rather than mere philanthropy or altruism. By framing nature as "living infrastructure", it becomes clear who benefits from its maintenance, crystalising payment flows and ultimately investment returns. Biological assets, such as oyster reefs, can be viewed as performing infrastructure that provides high-value services, including water purification, marine biodiversity restoration, and cost-effective coastal defences. * Performance-linked Returns: One promising investment model being pioneered by Rebalance Earth focuses on ‘payments for ecosystem services’, where corporate off-takers like Nestlé Purina pay for specific outcomes such as cleaner water and marine biodiversity restoration. This creates a financial return that flows back to pension funds, such as the West Yorkshire Pension Fund, based on the reef's performance. * Addressing Systemic Risk: Gardner notes that peak rainfall in the UK has increased fivefold since 2010, posing a systemic threat to property and infrastructure. He argues that asset owners should allocate 2–5% of portfolios to natural capital to enhance the resilience of the physical assets — such as homes and railways — that their members rely upon. Such investments can provide a “natural hedge” for portfolios that are at risk from the physical risks of climate change at a time when information on adaptation actions across major asset classes is scarce. * The Evenlode Project – Scaling Up: The podcast highlights the latest stage of the Evenlode Landscape Recovery Project, west of Oxford. Rebalance Earth is providing catalytic capital to unlock £50 million in private investment alongside public funding to pay farmers for "landscape recovery". This project aims to create "sponge landscapes" that reduce flood risk, delivering maintenance cost savings for major infrastructure operators like Network Rail and power utility SSE. * The LTAF Opportunity: Gardner suggests that the Long-Term Asset Fund (LTAF) structure is an ideal "sweetie shop" for defined contribution and local government pension scheme funds to access a balanced portfolio of sustainable forestry, regenerative agriculture, and ecosystem services. He also describes the path from the sweetie shop to a global megastore for natural capital. Embracing the Fosbury Flop The conversation concludes with the analogy of the ‘Fosbury Flop’, with Gardner suggesting that the investment industry needs a similar leap in logic to address climate change. By moving away from viewing nature as an "add-on" and instead integrating it into the core definition of infrastructure, he argues the UK can lead the world in nature restoration. With more pension assets in the UK than total GDP, the shift toward a 70% private-capital funding model for landscape recovery offers a clear path toward both national resilience and institutional alpha.

Risk, Return and Responsibility – Episode 8: The Asset Owner's Moonshot Challenge

Risk, Return and Responsibility—the monthly podcast from Sustainable Investor—provides institutional asset owners with the news and views shaping the sustainable investment landscape and our wider economic and social systems. In this episode, former UK pensions minister Guy Opperman and Sustainable Investor Editorial Director Chris Hall talk to Marisa Hall, Head of the Thinking Ahead Institute (TAI), about the role of asset owners in the evolving landscape of global capital. As a former actuary and now leader of a global not-for-profit investment network, she provides a unique window into how the world’s most influential asset owners are adapting to a "ruptured" global order. From the findings of the TAI’s latest Asset Owner 100 report to the "Moonshot Challenge" of systemic investing, this conversation delves into why traditional investment "buckets" are being broken down in favour of a more dynamic, holistic approach. Guests   ● Marisa Hall: Head of the Thinking Ahead Institute ● Guy Opperman: Former UK Pensions Minister and host ● Chris Hall: Editor-in-Chief of Sustainable Investor Interview highlights * The Power and Concentration of Global Capital: The TAI’s Asset Owner 100 report highlights that the top 100 asset owners control roughly US$30 trillion in capital, with the top 20 "megas" alone commanding 56% of those assets. These organisations are viewed as the "movers and shakers" of the industry, wielding the most influential capital on the planet to shape the future of the global economy. * The Shift to a Total Portfolio Approach (TPA): Leading asset owners are moving away from traditional strategic asset allocation and rigid asset class "buckets" toward a TPA model where every dollar must compete for capital. This approach serves as a gateway to better sustainability practices by allowing investors to be more dynamic and use real-time information to meet their long-term goals. * Navigating the Net Zero Plateau through 3D Investing: While 52% of the top 100 asset owners have set net zero targets, new commitments have plateaued. But the challenges to universal owners from interconnected and systemic risks are prompting a shift toward "systems-level investing". This includes a 3D Investing framework that helps asset owners look beyond risk and return to consider the real-world impact their investments have on the systems they rely upon for future returns. * The Impact of Consolidation and Strategic Partnerships: Consolidation in markets like Australia and the UK is enabling asset owners to build greater internal capability and develop "smart partnerships" with asset managers, based on a shared view of the role of investment capital in driving sustainable growth. This scale allows large funds to be patient, selective, and act as a "critical friend" to their asset managers, ensuring deep alignment with the best long-term interests of their members. * Geopolitics and AI as Systemic Determinants: Geopolitics has shifted from being a mere driver of returns to a determinant of how the entire investment system functions. Simultaneously, asset owners are building "intelligence ecosystems" to embed AI into their processes, aiming to generate "organisational alpha" by combining technology with human culture and decision-making. Embracing the Moonshot The conversation concludes with a forward-looking assessment of the "Moonshot Challenge"—the idea that investment organisations must understand and address interconnected and systemic risks at source to thrive in an increasingly complex world. Despite a "plateauing" in the announcement of explicit commitments, there is a growing sense of optimism that major asset owners are becoming smarter, more creative, and more resilient in how they integrate sustainability into their investment decisions. By focusing on stewardship, collaboration, and a reset of how we define risk, the leaders of today’s US$30 trillion capital pool are moving into a position to not just navigate the future, but to actively shape it for the generations to come.