Do UK workers care about green pensions?
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.
How can we make the UK’s pension investments greener?
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.