Do you want your retirement to invest in companies that harm the planet? | Pensions
WWhether it’s cutting back on meat and dairy or switching to a green energy business, people are increasingly looking for ways to reduce their impact on the environment. However, most of us are unaware that they generally support the fossil fuel industry through occupational retirement.
The average UK pension pot funds 23 tonnes of CO each year2 emissions through the companies it invests in – the equivalent of running nine station wagons each year or burning 1,100 coal fires a year – according to a company called Cushon, which earlier this year launched what ‘it claimed to be “the world’s first net zero pension”.
To counter this, the fintech company says you’ll have to recycle for 19 years or plant 30 acres of forest.
Rianna Gargiulo, divestment activist at Friends of the Earth, says, “Most employees don’t know they fund fossil fuel companies. It does not occur to people, and pensions are not easy. But there are more and more fossil-free funds available because people are starting to question it. “
Environmentally conscious workers take action and challenge their employer or pension organization to deliver a retirement that lives up to their values.
Three years ago, after reading a report highlighting this ethical issue, Caroline Hopper, 27, a writer, decided to take a look at what her professional retirement was invested in. She was shocked to see that Shell, BP and a tobacco company were among the best. 10 farms.
“I was not happy,” she recalls. “I’ve told everyone at work that’s what we’re investing in – let’s see if we can make a change.”
Hopper, who lives in London, spoke to one of the co-founders of his employer, Quiet Room. He was not only open to changing the occupational pension scheme, but also hired an independent financial advisor to set up one-on-one meetings with his 20 employees about the funds they wanted him to invest in.
“The financial advisor made sure our pensions were aligned with what we care about and the risks we wanted to take,” says Hopper. She and several of her colleagues transferred their money to a sustainable fund.
Almost two-thirds (63%) of savers don’t know where their pension is invested, while 44% of people would switch to a green fund if their provider offered it to them, according to a survey by director Richard Curtis. Make my money count countryside. He is pushing for part of the £ 3 trillion in UK pensions to be taken from industries that harm people and the planet, and towards sustainable businesses.
He wants all funds to commit to net zero carbon emissions, with emissions halving by 2030. (The term “net zero” basically means achieve a balance between the carbon emitted into the atmosphere and the carbon extracted from it.)
For some time now, Rob Roach, 55, of Sidcup, south-east London, has been talking with his employer and pension provider about the possibility of offering a vegan and ethical retirement option.
Although he continued to contribute to the company’s default pension plan, he says it conflicts with his beliefs. “You don’t want to have a set of ethics and then spend your money investing in companies that do the opposite,” he says.
“I don’t want money in the multinational meat trade or in the pharmaceutical companies involved in animal testing.”
Many emails later, and after engaging with the Vegan Society to help advance their cause, a vegan-friendly option, Kames Ethical Equity Fund, will be available soon. “I’m overjoyed,” he said. “I facilitated the change. This is one of the best things I have done in this business.
Over the past year or so, a series of major UK pension schemes and companies, from University pension plan at Nest (National Employment Savings Trust), have taken action. Some have set net zero carbon emissions targets, while others have announced plans to stop investing in certain companies and sectors.
Just this month the government announced that pension plan administrators would, in the future, be required to assess and report publicly on the risks of climate change for their investments. The new rules could be introduced as early as October, although initially they will mainly apply to large pension plans, with the hope that smaller ones will be introduced from 2024.
While many vendors are starting to come up with sustainable options, before choosing one, it’s worth digging a little deeper. While they can exclude tobacco, oil and gas, they can include global companies that you don’t want to invest your money in.
If you want to make a change, discuss it with your employer. “You have to say you’re not happy with this, it’s causing a climate emergency… what can they do about it? Says Tony Burdon, Managing Director of Make My Money Matter. “Try to get the pension provider to change what they’re doing… a lot of funds commit to going to a net zero level. Some will if we all start pushing for change.
Make My Money Matter has a email template to send to your supplier to encourage them to go net zero.
Carolyn Saunders, head of pensions at law firm Pinsent Masons, said that while there is no legal obligation for an employer to offer alternative retirement options, there are good reasons why they might consider a change.
“For example, someone who takes a particular stance on sustainable development is likely to attract employees who are in favor of that stance. So having a pension plan that doesn’t reflect that could lead to employee pressure for change and reputational risk, ”she said.
If you’re not happy with any of the options a provider offers, you can, in theory, switch to something like a Self-Invested Personal Pension (Sipp) – a “wrapper” that holds investments up. your retirement and start earning income. income – and choose funds that better match your values. However, be aware that your employer is very unlikely to always contribute, realistically it may not be a runner.
It should be noted that the shift to a greener retirement may also offer better returns.
Hopper says she recently moved some money left over from her original jar to the sustainable pension, and “it was good to see the green definitely outperformed the old pension.”