Green your pension: how you can help the environment
UK pension funds are worth approximately £3tn with this huge wealth invested in assets all over the world. If you are eager to reduce your carbon footprint, making your pension “green” is 21 times more effective than giving up flying, becoming a vegetarian and changing an energy provider combined, according to the campaign group Make My Money Matter. So how can you make your pension better for the planet?
Romi Savova, the chief executive of the pensions consolidator firm PensionBee, says the question you need to ask yourself is: “What does being more green mean to you?”
She says: “Because the way it is expressed in the pensions industry can be very, very different, depending on the pension plan and provider.”
When looking at whether your pension aligns with your values, one thing to consider is what your approach will be. “Are you looking for investments that exclude companies which contribute to environmental challenges, or do you want to be invested in a way that engages with these companies to push them to do better?” says Helen Morrissey, the senior pensions and retirement analyst at Hargreaves Lansdown.
“Engagement,” Savova says, “means you continue to invest in companies that may be major fossil fuel producers, for example.
“But your asset manager, or pension provider, takes an active role in engaging with those companies, to encourage them to reform, over time, and put themselves on a more sustainable trajectory for the future.”
Stakeholder engagement, with the threat of divestment, is powerful, says David Macdonald, the founder of the independent financial advisers Path Financial.
“If you’re an active shareholder, you’re challenging them constantly to improve standards, to make faster changes, to have more credible
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