05 July 2021

Over half of consumers want their pension invested responsibly to help tackle climate change

4 min read

Profile picture of Sarah Pennells
Sarah Pennells

Consumer Finance Specialist

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  • More than half (57%) of consumers want their pension to be invested responsibly to help tackle climate change. 
  • Despite this, only one in seven (15%) people who have a pension currently invest it responsibly.
  • However, over four in ten (44%) are interested in investing their pension responsibly but don’t know where to start.

New research from mutual pension provider, Royal London, reveals more than half (57%) of consumers want their pension to be invested responsibly to help tackle climate change, with only one in ten (9%) saying they don’t want their pension invested responsibly. Despite this enthusiasm for responsible investment, only one in seven (15%) people who have a pension currently invest it responsibly.

Of those who do not currently invest their pension responsibly, a third (33%) said they were more likely to do so once they had been given an explanation of what responsible investing involves.  The research also shows around two in five (44%) people are interested in investing their pension responsibly but don’t know where to start.

With an estimated 21 million people currently paying into a pension, either through their workplace or privately, that translates to approximately 3.14 million (15%) currently investing responsibly. However, an additional six million could make the change to responsible investing once they understand what it could involve.

The research found a significant age divide, with more 18-34-year-olds (66%) willing to invest their pension responsibly than those aged 55+ (40%). Women were more likely to say that all pensions should be invested responsibly (52%) than men (47%). More women (46%) than men (41%) also say they are interested in investing their pension responsibly but don’t know where to start.

 

Investing pensions responsibly has the potential to make a significant difference to climate change. For example, the Royal London Sustainable Leaders fund, which invests in companies that are either leaders on the basis of their environmental, social and governance approach, or provide a net benefit to society, has a carbon footprint that’s 28% lower than the FTSE All-Share Index.

Action on climate change

While only a minority of people are currently investing their pensions responsibly, many people are  taking other actions that they believe can help reduce climate change.  Almost six in ten (58%) say they turn their heating thermostat down by one degree or switch off lights that are not needed, with a further 36% saying they would be willing to do this. And although four out of ten (42%) currently cut down on single use plastic, over half (51%) would be willing to do this.

Sarah Pennells, consumer finance specialist at Royal London said:

“While it’s really encouraging that people are willing to change their habits to help tackle climate change, we’ve got a long way to go to get people to think about checking where their pension is invested  in the same way they look at the amount of plastic  packaging on fruit and vegetables.. Our research shows that one of the blockers is that people simply don’t know what responsible investment involves or where to start - and that’s a challenge we have to address.

Sarah continued:

“Our standard of living is shaped by our finances and the environment we live in. Having a large pension fund isn’t going to guarantee a great retirement if your home is at increased risk of flooding, or the air quality in your neighbourhood is poor, because of the effects of climate change.”

- ENDS -

For further information please contact:

Meera Khanna, Senior PR Manager

Notes to Editors

  1. Royal London commissioned a survey by Opinium between 4-8 June 2021 with a sample of 2,000 nationally representative UK adults.
  2. The explanation of responsible investing given to those taking part in the survey was:
    There are trillions of pounds invested in UK pensions and this money is invested in a range of companies that are shaping the world’s future. These could include high street retailers, airlines, banks and energy providers. By choosing to invest your pension responsibly, you’re taking into account the impact that companies you invest in have on the environment, society, and how well the company is run. You can find out how your pension is invested by talking to your pension provider. Does this information change how likely you would be invest your pension responsibly?
  3. According to the ONS Pension wealth in Great Britain - Office for National Statistics (ons.gov.uk) latest report, in 2018, 53% of adults aged between 16 and 64 are active members of a pension.
  4. More information on the Royal London Sustainable Leaders fund and its carbon footprint can be found here tcfd-report-2020.pdf (rlam.co.uk)
  5. More information on the Together for Good campaign can be found here: https://www.royallondon.com/togetherforgood

About Royal London

Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £148 billion, 8.8 million policies in force and 4,412 employees. Figures quoted are as at 31 December 2020.