Our purpose is Helping Britain Prosper.
We have an important role to play in creating a more sustainable and inclusive future.
Lloyds Banking Group incorporates many household names.
As with all necessary struggles it’s often the actions of brilliant and tenacious individuals that create lasting change.
This report provides an update on our progress towards the Group's sustainability ambitions.
We put you first, so you can put our customers first.
Our charitable Foundations are celebrating 40 years of tackling social disadvantage and Helping Britain Prosper.
Disclosures relating to our strategic, financial, operational, environmental and social performance.
See all the key dates in the financial year.
Higher, more sustainable returns as we continue to Help Britain Prosper.
How Lloyds Banking Group is delivering against its strategy and achieving growth.
Build something that changes everything. Join us as we explore new ideas and technologies to reshape the world of finance.
Xinyi is pioneering AI and advanced analytics at the Group alongside her part-time role as a concert pianist.
Lloyds Banking Group is best known for its portfolio of financial services brands.
Our purpose is Helping Britain Prosper.
We have an important role to play in creating a more sustainable and inclusive future.
Lloyds Banking Group incorporates many household names.
As with all necessary struggles it’s often the actions of brilliant and tenacious individuals that create lasting change.
This report provides an update on our progress towards the Group's sustainability ambitions.
We put you first, so you can put our customers first.
Our charitable Foundations are celebrating 40 years of tackling social disadvantage and Helping Britain Prosper.
Disclosures relating to our strategic, financial, operational, environmental and social performance.
See all the key dates in the financial year.
Higher, more sustainable returns as we continue to Help Britain Prosper.
How Lloyds Banking Group is delivering against its strategy and achieving growth.
Build something that changes everything. Join us as we explore new ideas and technologies to reshape the world of finance.
Xinyi is pioneering AI and advanced analytics at the Group alongside her part-time role as a concert pianist.
Lloyds Banking Group is best known for its portfolio of financial services brands.
With many companies undermining their own sustainability progress by not accounting for the carbon output of their pension scheme, we’re calling for companies to include pensions in their sustainability strategies.
A lot of emphasis is put on individual behaviour in an effort to reduce the UK’s carbon footprint. People are taking action like cutting down on their meat consumption and reducing the amount that they fly in order to live in a more sustainable way.
However, there is one big, carbon-emitting factor that affects all of us but often gets overlooked, and that is the UK’s pensions. In fact, research shows that making a pension ‘green’ is 21 times more effective at cutting an individual’s carbon footprint than adopting a vegetarian diet, changing their energy supplier and giving up flying combined.
And while some highly engaged individuals may know exactly how their pensions are invested, they are not the norm. Most savers rely on their employer or pension fund manager to make good choices on their behalf.
How a pension is invested can play a big part in a company’s carbon output. But, as research conducted by Scottish Widows, the Make My Money Matter campaign, and sustainability consultancy Route2 shows, the pension schemes of the UK’s largest companies could be responsible for seven times more emissions than those caused through their own operations in the UK.
However, these huge figures are often missed out of businesses sustainability reporting and ESG strategies, meaning that companies don’t have the full picture when it comes to their own climate credentials.
Nearly
£3 trillion
is invested in pensions in the UK.
Taking stock of how pensions have been invested is an effective first step for companies to not only lower their carbon output, but also to create a better future for the UK through investment in causes as diverse as offshore windfarms through to STEM facilities at top UK universities.
More needs to be done across the whole industry to help business leaders and CEOs see these investments as an extension of their own carbon outputs. Nearly £3 trillion is invested in pensions in the UK, and by taking stock of how – and where – this is invested we can help the UK’s pensions have a positive effect on the future success of a net-zero economy. This will help to take pressure off individuals trying to make sustainable changes, and drive change at a much bigger and more effective scale.
Pension funds have invested trillions on the behalf on pension savers without ever asking the crucial question – do these investments create a world we want to live in? So much of pensions’ potential to do good is as yet untapped, but their investments could help drive innovation, cure disease, or even build homes and vital infrastructure.
Most companies have established initiatives to help them be greener, from investing in energy-efficient buildings to requiring robust sustainable working practices from their suppliers. However, as the Make My Money Matter report looking at the sustainability of FTSE100 companies pension schemes shows, many are undermining (or even undoing) the sustainability progress they’re making across their own operations. These pension funds currently finance seven times more carbon emissions than their own company operations, resulting in 131 million tonnes of unreported carbon each year.
Less than 10% of FTSE100 companies include pensions within their public sustainability strategies. Most worryingly though, it seems that many business leaders are failing to understand the issue, with only 45% of CEOs and leaders acknowledging that their company pension scheme could drive climate change.
That 131 million tonnes of carbon emissions financed by FTSE100 company pensions is the equivalent of roughly one third of the UK’s annual carbon emissions, so addressing this output would have a significant effect on the UK’s overall carbon footprint.
Because the carbon emissions financed by typical FTSE100 company pensions are seven times higher than the reported Scopes 1-2 operational emissions of those companies, in reality these companies aren’t as green as they as they might look on paper. Pension sustainability needs to be included in overall company reporting, as CEO’s and business leaders don’t have the full picture of how well they’re actually doing when it comes to their carbon credentials.
How is ESG different to CSR? And why can it be good or businesses?
In a nutshell, the UK workforce really does care about the sustainability of their pensions. Research conducted by Scottish Widows (PDF, 1.89MB) shows that across the UK workforce eight out of ten employees view climate change as an important issue, while 72% of employees say it is important that their employer invests their pension sustainably. This isn’t just a ‘nice to have’ benefit either - sustainable pensions and green finance options are now included in the top four of employee desires from new employers, alongside flexible working, support for the increased cost of living and attractive holiday packages.
This means that how sustainable a company pension scheme is could start being a major deciding factor when potential talent is choosing where to work. Businesses may need to step up their efforts to stay competitive in the employment market.
However, only 25% of employers claim to be knowledgeable about green pensions – while 27% of employers have never heard of them. Today’s workers expect employers to be showing true leadership and offering pensions which are invested responsibly. Demonstrating a genuine commitment to ESG priorities is not only the right thing to do for the planet, it could also be a game changer for attracting and retaining the best talent. Business leaders have a real opportunity to show staff that they are serious about doing the right thing.
Individuals are already taking steps in their personal lives to live more sustainably – making sure their pension is invested sustainably is part of that. UK adults believe the biggest benefit of investing in a “green” or “sustainable” pension is the improvement that it would make to the lives of future generations (41%), followed by the fact it could help save the planet (40%).
Despite the overwhelming preference by employees’ for investment habits that benefit the environment, there is in reality some disconnect in the desire and the follow-through, as only a quarter (25%) of those with pensions have checked where it is invested in the last year.
While it may be a shock for many business to realise they have overlooked such a significant carbon output, there are now several opportunities for employers to improve their pensions and all-round sustainability credentials, including:
Lloyds Banking Group’s insurance, pension and investment brand Scottish Widows – which looks after nearly £190bn of savings for more than six million customers in the UK – is looking to bring about change by offering customers sustainable fund choices, while at the same time challenging the companies it invests in to behave more sustainably and responsibly.
Earlier this year Scottish Widows also launched its Climate Action Plan, a clearly defined strategy for long-term decarbonisation and a net-zero portfolio by 2050. We’ve also pledged a further £1.5 billion worth of divestments, bringing the total to £3 billion, in a major new update to our exclusions policy.
Pensions are one of the most powerful tools UK businesses must tackle the climate emergency, and businesses cannot afford to ignore them. We’re calling on businesses to fully integrate pensions into their sustainability reporting and strategies, as by doing this businesses can honour their existing efforts to operate more sustainably, respond to employee demand and use their influence to drive systemic change across the pensions industry.
ESG, or responsible investing, aims to grow investors' money by making sure these non-financial factors are taken into account when investment.
Maria is Head of Pension Investments and Responsible Investments at Scottish Widows. She is responsible for defining the investment offering across our pension business, covering workplace savings, individual and longstanding customer segments, and for incorporating ESG into the investment design. She has previously held senior DC investment roles at Mercer and JLT.
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