Interactive Investor

Pension holders think more ethically than savers or investors

16th February 2021 14:28

Laura Miller from interactive investor

Research finds 78% of retirement savers think about helping the environment.

Personal responsibility for preserving the planet extends more to our pensions than our other savings and investments, according to research.

While 78% of those contributing to a pension felt they needed to combat environmental challenges, a study by financial insight firm The Wisdom Council found this sentiment did not extend to their other finances.

Almost 60% didn’t realise they could make a difference through their other long-term saving and investments.

The study found widespread support for green investing. More than eight in 10 savers (81%) said they think every company should be as environmentally responsible as it can be.

That doesn’t mean increasing fees or sacrificing returns, however, with 63% still expecting their investment providers to focus on their core role of delivering performance.

But there is scepticism about how well financial institutions can support the green agenda. More than half (52%) of those surveyed said they don’t believe the investment industry can make a difference to tackling climate change.

The investment sector was viewed as one of the least likely to be able to operate sustainably – only mining, aviation and fossil fuels were perceived as worse, the study found.

Josh Blundell, head of research at The Wisdom Council, said: “When someone looks for ways to be more sustainable in their lifestyle, they think about recycling or they think about reducing plastic or choosing a green energy supplier – they are not thinking about where their pension or ISA is invested and where they could arguably have a bigger impact. 

“There is a real lack of awareness and knowledge on the role that the industry can play in responding to the big environmental and social challenges that we know are part of our daily lives.”

When consumers are made aware of opportunities to invest their money responsibly, demand is strong. Two-thirds of consumers in the study thought some or all of their pension should be invested using responsible principles.

But they found the many options around sustainable investing confusing. Instead they wanted the financial sector to put in place responsible investment on their behalf.

Blundell said: “The implication is environmental, social and good governance considerations should be a core part of the process for any default pension fund or retail investment product. Being a responsible company and investor is now a hygiene expectation among UK consumers not something you can do on the side.”

The study found 45% of consumers would be willing to actively engage in a conversation on responsible investment – if the communication is delivered more successfully – while 43% would be interested at only a more passive level. 

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