Sustainable retirement savings options
Over recent years, our comprehension of the climate crisis has significantly transformed. Countries and organisations are becoming increasingly ambitious with their net zero targets, while many individuals are making lifestyle alterations to reduce their household carbon emissions. However, some remain oblivious that pensions represent one of our most potent tools for making substantial strides towards net zero.
A recent Green Pensions Report[1] reveals that whilst most Britons understand how to lessen their carbon footprint through behavioural changes, two-thirds (67%) are unsure how to transition to a ‘green pension’.
Addressing this knowledge gap could empower UK consumers collectively to save up to 386 million tonnes of carbon emissions annually through their pensions[2] – the equivalent of 11 return flights from London to New York per person[3]. Despite this, savings and pensions are often overlooked in the conversation around individual impact on climate change.
Growing appetite for responsible retirement savings
A green pension is a fund designed to produce returns for savers through environmentally beneficial investments. These funds typically have explicit environmental objectives, such as avoiding or reducing investments in industries like fossil fuels that generate substantial carbon emissions or focusing on investments that support carbon emission reductions.
The report delves into the rising interest in responsible retirement savings options among employers and employees. Key findings include:
Three-quarters of UK consumers (74%) are interested in learning more about sustainable options for retirement savings.
Yet, only 10% of the UK population has fully transitioned to green pensions, primarily due to a lack of information and access.
Nearly a quarter (23%) of UK companies do not offer green or ethical pensions to their employees.
The need for greater awareness and accessibility
The potential for green pensions to contribute significantly to our net zero goals is vast. However, there is a pressing need for increased awareness and accessibility to these sustainable retirement savings options. By bridging the information gap, individuals can make informed decisions about their pensions, contributing significantly to the fight against climate change.
Source data:
[1] The research was conducted online by Opinium for Scottish Widows, polling 3,000 UK adults (18 and over) working, self-employed or looking for work and 1,000 HR DMs in companies of 1+ employees. Fieldwork was carried out between 25/08/2023 – 06/09/2023.
[2] 368 million tonnes of carbon saved by switching to a green pension was calculated as follows: 19 tonnes [Total carbon savings secured per person by switching pension to an equity-focused sustainable fund (Source: Make My Money Matter, 2021)] x 20,340,000 people [Number of people with a workplace pension who do not have a green pension (Source: ONS 2021 states that 22.6 million people have a workplace pension, SW Green Pensions Report 2023 found that 10% of respondents have a green pension (20,340,000 = 90% of 22,600,00)]
[3] The equivalent of 11 return flights from London to New York was calculated as follows: 19 tonnes [Total carbon savings secured per person by switching pension to an equity-focused sustainable fund (Source: Make My Money Matter, 2021)] ÷ 1.7 tonnes [Average amount of carbon dioxide emitted per person by a return trip from London to New York (Source: Wired 2021)]