Legal & General’s Net Zero Obsession: A Recipe for Wrecking Your Pension

 

Legal & General (L&G), one of the UK’s largest asset managers, oversees more than £1.2 trillion in assets, including the workplace pensions of millions of Britons. If you have a pension, there’s a good chance L&G manages it. Their decisions shape your financial future, so you’d hope their sole priority is maximising returns to ensure a comfortable retirement. But last week. However, their aggressive commitment to net zero is putting your pension at risk. Here’s why.

The Net Zero Pledge: Ideology Over Returns

L&G has pledged to achieve a net zero asset portfolio by 2050, with interim targets like a 50% reduction in carbon emissions intensity by 2025 and 65% by 2030. This sounds noble—reducing carbon emissions to combat climate change—but it’s a dangerous gamble with your retirement savings. Their Climate Impact Pledge pushes companies they invest in to align with a 1.5°C net zero transition, using their £1.2 trillion clout to pressure firms into compliance.

This isn’t about prudent investing; it’s about ideology. L&G’s focus has shifted from maximising returns to enforcing environmental goals, even when they conflict with financial performance. By prioritising net zero, they’re making decisions that could erode the value of your pension, and here’s how.

The Economic Fallout of Net Zero

1. Divesting from Profitable Sectors: L&G’s net zero strategy involves shunning or pressuring high-carbon industries like oil, gas, and mining. These sectors, while not trendy, have historically delivered strong returns. Energy stocks, for instance, outperformed many “green” investments during the 2022 energy crisis, with oil and gas companies posting record profits. By divesting or limiting exposure to these sectors, L&G risks missing out on gains that could bolster your pension. A 2025 report noted that UK pension providers, including L&G, scored poorly on phasing out fossil fuels, suggesting they’re already restricting investments in these still-profitable areas.
2. Overpaying for Green Hype: L&G is funnelling billions into “clean infrastructure” like wind farms, solar parks, and net zero-ready homes. While renewables have potential, many green investments are speculative, heavily subsidised, and prone to underperformance. For example, offshore wind projects in the UK have faced cost overruns and delays, with companies like Ørsted slashing profit forecasts in 2023. Betting big on unproven technologies or overhyped green stocks—often trading at inflated valuations—exposes pensions to unnecessary risk. If these investments flop, it’s your retirement that takes the hit.
3. Engagement Over Performance: L&G’s Climate Impact Pledge emphasises “engaging” with companies to improve their net zero alignment. This means spending resources to pressure firms into costly transitions rather than focusing on those delivering the best returns. Forcing companies to prioritise emissions over efficiency can lead to higher costs, lower profits, and weaker stock performance—directly impacting your pension’s growth.
4. Transition Risks: A 2025 report warned that UK pension funds could see investment returns decline by over 20% by 2040 due to climate-related transition risks. L&G’s aggressive push for net zero accelerates these risks by forcing rapid shifts away from reliable revenue streams toward untested green ventures. If markets or policies shift unexpectedly—say, if net zero mandates ease or green subsidies dry up—your pension could be left holding overvalued, underperforming assets.

The Numbers Don’t Lie

L&G manages £1.2 trillion, a sum so vast it could fund the UK’s NHS for a decade. Yet, their 2025 target of a 50% emissions intensity reduction is already shaping their investment choices. This isn’t a distant goal; it’s affecting decisions now. In 2023, they reported being “on track” for this target, meaning they’re actively reshaping portfolios to prioritise emissions over returns.

 

Pensions rely on compound growth over decades. Even a 1% annual underperformance due to net zero-driven decisions could shave hundreds of thousands of pounds off your retirement pot. For example, a £100,000 pension growing at 5% annually would reach £265,000 in 20 years. At 4%, it’s only £219,000—a £46,000 loss. Multiply that across millions of savers, and L&G’s net zero obsession could cost billions in lost retirement wealth.

The Bigger Picture

L&G’s not alone. Other UK pension providers like Aegon and Aviva are also chasing net zero, but L&G’s scale makes its decisions seismic. Their influence can reshape entire markets, forcing companies to adopt costly green policies or risk losing investment. This creates a ripple effect: higher business costs, lower profits, and weaker pension growth. Meanwhile, savers—ordinary workers relying on these pensions—have little say in the matter.

 

The push for net zero assumes a smooth transition to a green economy, but reality is messier. Energy prices spiked in 2022 when renewables couldn’t meet demand, and similar shocks could hit again. L&G’s bet on a flawless green revolution ignores these risks, leaving your pension vulnerable to market volatility and policy failures.

What Can You Do?

If you have a workplace pension with L&G, your retirement is at stake. Here’s how to protect it:

• Check Your Pension: Find out if L&G manages your workplace pension and review its investment strategy. Look for heavy tilts toward green funds or divestment from traditional energy.
• Demand Transparency: Contact your pension provider or employer and ask how net zero policies affect returns. Push for clear answers, not greenwashed platitudes.
• Explore Alternatives: If L&G’s priorities don’t align with yours, consider transferring your pension to a provider focused on returns over ideology. Seek independent financial advice first.
• Speak Up: Engage with L&G directly or through your pension trustee. They’re managing your money—make sure they know returns come first.

Conclusion

Legal & General’s net zero commitment might win applause at climate conferences, but it’s a reckless experiment with your pension. By prioritising emissions targets over financial returns, they’re betting your retirement on a utopian vision that’s far from guaranteed. Divesting from profitable sectors, chasing overhyped green investments, and pressuring companies to prioritise climate over profit could cost savers billions. At the AGM, I saw a company more concerned with its ESG credentials than your financial security. If L&G doesn’t refocus on maximising returns, the dream of net zero could turn your retirement into a nightmare.