Switching to an environmentally-conscious pension can save more carbon emissions than stopping flying, but most UK pension holders don’t know how to make the change, according to research.
Scottish Widows’ latest Green Pensions Report has found that while most Brits are well aware of how to reduce their carbon footprint through changing their behaviours, two thirds (67%) of those surveyed don’t know how to switch to a ‘green pension’. Almost one in seven (13%) do not realise that there are differing environmental impacts across pension funds.
In light of these findings, Scottish Widows is urging the government, employers and pension providers to make sustained efforts to educate the UK workforce about the potential environmental, social, and financial benefits of responsibly-invested pensions.
The gains from increased knowledge about how to switch to an environmentally-conscious pension are potentially huge – UK consumers could collectively save up to 386 million tonnes of carbon emissions annually through their pensions – the equivalent of 11 return flights from London to New York per person.
This is based on 19 tonnes of total carbon savings secured per person by switching pension to an equity-focused sustainable fund, according to Make My Money Matter in 2021, multiplied by the 20.3 million people in the UK who with a workplace pension who do not have a green pension, according to the ONS in 2021.
Yet savings and pensions ranked last in terms of perceived impact on climate change amongst a range of factors in an individual’s lifestyle – only 10% of employees surveyed by Scottish Widows have fully switched to green pensions.
It is thought a lack of information and access is to blame. Just under a quarter (23%) of companies surveyed do not offer green or ethical pensions to their employees.
However, Scottish Widows found three quarters of employees surveyed (74%) expressed a keen interest in obtaining more information about sustainable options for retirement savings.
Shipra Gupta, responsible investment lead at Scottish Widows, said the findings “demonstrate a critical need for heightened awareness and action regarding the role of green pensions in mitigating carbon emissions”.
While countries and organisations are being bolder in their net zero targets and individuals making changes in their lifestyles to cut their household carbon emissions, “most people are still unaware that pensions are one of the most powerful tools at our disposal to make real progress towards net zero”, she said.
Environmental advocate Jarvis Smith added: “Green pensions help to reduce carbon emissions by reallocating capital from polluting industries that may not align with your values – such as arms and fossil fuels – into those which seek to underpin and accelerate a green and just transition.
“Our pensions are a tool not only to protect our own futures, but the future of our planet. We have the means to make a difference with our pensions. It is one of the most important and straightforward switches you can make.”
