Peers push for pension funds to divest from thermal coal

New research published by the Finance Innovation Lab has found that UK pension funds have at least £10.5 billion invested in companies which are extracting or burning coal.

The findings have been published as the House of Lords continues its scrutiny of the Pensions Schemes Bill, including a proposed amendment supported by cross-party Peers that would require pension funds to divest from thermal coal and support an orderly transition more widely from fossil fuels.

The UK’s last coal fired power station closed in 2024, making the UK the world’s first major economy to phase out coal power. However, according to researchers, the drop in emissions achieved by the UK power sector between 2019 and 2025 (driven largely by the growth of renewable energy and the closure of our last coal plants) might be eclipsed by a similar level of annual emissions from coal extraction and burning being funded by UK pensions funds overseas.

“The UK is rightly proud to have eliminated coal from our own energy mix. It is absurd that our pension funds continue to finance its expansion and use overseas. Coal is hugely destructive for the climate and nature, and it is also a risky investment. Divesting from thermal coal is in the interests of both pension savers and the planet.” Lord Sharkey (Lib Dem)

“Many pension funds are already taking a risk-based approach to reducing their exposure to coal and other fossil fuel investments. Parliament now has an opportunity to put in place proportionate, practical legislation to support an orderly transition across the sector to protect pension savers from the growing financial risks of continued reliance on fossil fuels.” Baroness Hayman (Crossbench)

“Many pension funds are already taking a risk-based approach to reducing their exposure to coal and other fossil fuel investments. Parliament now has an opportunity to put in place proportionate, practical legislation to support an orderly transition across the sector to protect pension savers from the growing financial risks of continued reliance on fossil fuels.” Baroness Griffin (Labour)

The proposed amendment will be debated at Committee Stage in the House of Lords on the 23rd February 2026. You can follow developments here.