68% of UK investors want their pension in sustainable and responsible companies - what are firms doing about it?
New survey results from our second annual ESG survey reveal an overwhelming desire to invest in sustainable and responsible companies, with 68% of people claiming it matters to them that their pension money is invested this way. However, over half of those surveyed (53%) have no idea what funds their employer has their pension invested in, most likely trusting their employer to make the right choices for them.
According to the Office for National Statistics by the end of 2019 there were over 40 million pension holders in the UK, broken down to 22.4 million in defined contribution schemes and 18.3 defined benefit and hybrid schemes. This means that over 20 million people potentially have no idea what their pension is invested in, so companies and pension schemes still have a lot of work to do in educating people and facilitating the change.
We all need to understand the power of our pension funds to ultimately improve our world and save our planet. It’s as simple as that. And with a huge £2.6 trillion in UK pension schemes, it’s easy to understand why our pension money should have a bigger impact than money in other types of investments and savings. It’s a massive amount of money that could make a staggering difference to our world.
ESG investing is where fund managers invest in companies that work towards improving the Environment, addressing Social inequality or Governance improvements- you can find out more about ESG investing here. Now in its second year, the annual TPO ESG survey results confirm that there is much more that employees, companies and pension schemes can do to use this huge fiscal sum to accelerate economic and investment led changes.
The most encouraging outcome of the survey was that of those that know where their pension is invested, 56% stated they want their pension fund to be exclusively invested in ESG related assets such as shares and funds. That’s potentially half of all the money in pensions schemes that could be invested in a better world for us all. But the responsibility lies with companies, trustees and funds to make it easy to switch.
Of those people that didn’t want to invest in ESG or were unsure about ESG investing, the overwhelming reason was a lack of knowledge, with 49% saying they just didn’t know enough.
The survey also revealed that 10% fewer people are happy for their pension money to be invested in the same way as they would their other investments, with 78% of people stating they would be interested in their general investments having exposure to responsible and sustainable companies compared to 68% of people stating that it matters to them that their pension is invested in this way. With a lack of transparency in the pensions market about the availability of ESG investments, this is probably to be expected.
Unlock the power of your pension to improve our world
We need to harness the power of our pensions and use our money to work for good. But we need to better educate those who know little about the value of ESG, and for those that do want to invest in a better way, they need more support to help them to do just that. It is clear that the majority of us want to invest our pension in a more responsible or sustainable way but lack the ability or support to do so. All employers and firms need to make it easier to choose the options available as if they did, potentially trillions of pounds could be invested in a better world for us all. How much of a difference this could make is mind blowing.
With three quarters of all respondents in our annual survey (75%) interested in learning more about ESG the most encouraging factor is that most of us want to do the right thing with our money but perhaps lack the knowledge or experience of how we can make the change. With some simple improvements in the industry, we could change our future. And with the simplicity of making an ESG pension choice – or switching to an ESG fund – it’s a critical responsibility for everyone in the industry.
The outcome of our survey only goes to back up the comments from the team at Make My Money Matter, who, with a range of high-profile voices including Stephen Fry, have cited poor transparency and limited public engagement as some of the reasons more pension money isn’t invested towards better causes.
If you’d like to learn more about ESG investing and how you can incorporate it into your own investment approach, then why not get in touch. We’re currently offering all those with £100,000 or more in pensions, savings and investments a free review worth £500.
The online survey was conducted between 20/10/21 to 22/10/21 using an online research company, Dynata. All respondents were aged 18-84 across all UK regions and respondents had to have at least £20,000 available to invest or save. The survey polled 508 UK adults. This is the second year of the survey run by TPO.
The content is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Most importantly, investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.