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The Power of Net Zero Pensions

By Team Maanch  |  
June 25, 2021  |  
6 minutes read

At Maanch we wanted to match our pensions with our values. For that reason, we recently signed the Green Pensions Charter, by Count Us In and Make My Money Matter. Not only this, but each individual Maanch team member has also made a personal commitment to an ethical pension- for example, by reviewing their holdings and moving to more sustainable ESG funds.

In light of our growing interest in the power of pensions and involvement in the ethical pensions movement, we attended the Net Zero Pension Summit hosted by Make My Money Matter in early June.

We wanted to share some of our thoughts and reflections as derived from this insightful event. Many thanks to the panellists for providing much of this content.

Why are our pensions so important?

Speaking at this summit, Mark Carney, former governor of the Bank of England, pointed out the immense responsibility that our pension funds hold. They must ensure the financial futures of their beneficiaries. Generally, pensions tend to be the largest pot of money held by any individual.

This means that they have enormous potential: not only to drive financial returns and security but also to further the causes cared about by pension-owners. And, as said by Helen Dean, CEO of Nest, 90% of eligible people are saving in a pension. Put simply, the sums of money are huge. If put to good use, this can push major positive impact. This is because the owners of pensions- and indeed other asset owners- can put pressure on asset managers, companies and the pensions industry to commit to Net Zero. 

Why is this so topical right now?

All around the world, people are choosing sustainability. The build-up to COP26 seems to emphasise a real turning-point in attitudes towards climate action and sustainable living.

As said by Richard Curtis at this summit, this past year has been an extraordinary one. And not only due to COVID-19. With the pandemic as the backdrop, the past year has seen a rise in social justice movements such as Black Lives Matter and Me Too. Simultaneously, extreme storms, apocalyptic wildfires, soaring temperatures and an increase in droughts and floods have put climate change firmly in the spotlight.

The events of the past year have caused a lot of people to reassess and reprioritise. Meanwhile, the pandemic has meant that many people have had a lot more time in which to step back from the fast pace of life and think about what really matters to them.

As Richard Curtis says, people are asking themselves the question: “What can I actually do with my resources to make a change?”

How has the climate situation changed since Paris 5.5 years ago?

Speaking at this summit, Christiana Figueres provided some interesting information about how our understanding of climate change has altered since the 2015 Paris Agreement.

1) We are now much more aware of the negative impacts of climate. As mentioned above, we are directly experiencing more of these impacts globally. We understand much more clearly that we are approaching dangerous tipping points in many ecosystems. We have a greater understanding of the consequences of either not acting on climate change or acting too late.

2) We are more aware of the urgency. Around the time of the Paris Agreement, we thought 2050 was a reasonable target. We now know that we have significantly less time – really by 2030 we need to have slashed our emissions by half.

3) Public expectation is much more vociferous, especially the expectation of youth. There is a strong demand that decision-makers act according to the point of view of the next generation.

4) We have much more understanding of the benefits of decarbonising our polluted global economy, for example safer food production and safer health.

5) Rising commercial value of investments in clean technology.

These five aspects provide us with a very different global context from that of 2015. One thing, however, has not changed. The production of emissions follows the financing. In other words, whatever gets financed will ultimately decide where emissions go. The enormous amount of capital in the public’s combined pensions means the pensions sector could play a crucial leadership role in shifting the future from destruction to regeneration.

Risks and opportunities

Speaking at this summit, Antonio Lorenzo, CEO of Scottish Widows, pointed out that companies who aren’t adapting their business models risk losing their competitive advantage and falling out of favour with their customers. This in turn has a negative effect on said company’s performance. Integrating ESG considerations therefore makes good financial sense. Conversely, not integrating these factors is a major risk.

Furthermore, employers are increasingly seeing that not only are their customers demanding certain things but so are their employees. At the very least, employees expect ethical pensions.

As Mark Carney points out, addressing climate change is an enormous commercial opportunity. It is in the interest of individuals, businesses and governments. It is also in the interest of pension funds. They are increasingly recognising the veracity of this and taking steps to ensure they do not get left behind in the drive towards global sustainability.

What next?

In the course of the last year, 15 pension schemes have committed to net zero. And 50 companies have signed up to the Net Zero Charter. But as an individual, what can you do?

1) Find out where your pension is and how it is being invested.

Make My Money Matter was set up to tell the public that their money could be put into shaping the world they wanted. But in order to enact positive change in how your pension is invested, you must first know your starting point.

2) Get a pension with intention.

Put aside some time and do some research into how your pension can be better invested in line with your values. Get a pension with intention: make your pension transformative and be a part of the change. After all, the money in your pension belongs to you. It can be used not only to ensure your future financial sustainability, but to ensure that you retire into a world that’s worth retiring into.

Many thanks to Make My Money Matter for such a thought-provoking summit and to all speakers for such illuminating insights.

Blog by Maanch team member Anna Wallich.

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