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Why a green eco pension is so important

When it comes to having a positive impact on planet and people, your money matters. We all know that we can “vote with our wallet” and influence positive change through considered purchasing, but where we save and invest our money has an enormous impact.

According to campaign group Make My Money Matter, switching to a green pension is 21x more effective at reducing your carbon footprint than giving up flying, going veggie and switching energy provider COMBINED.

Last year, we switched the company pension of all of Leap’s employees to a green pension with Nest, ensuring that the money being invested for their retirement is doing good and having a positive impact on the planet and its people, not a negative one.

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Make My Money Matter’s 21x campaign, created by Mother Design London

What happens to the money in your pension?

There is a staggering £2.6 trillion invested in UK pensions. People make regular contributions into their pension scheme over the course of their working life (often automatically when they are paid each week or month) and the pension fund takes all of its members’ contributions and invests them with the aim of growing their pension savings by the time a member retires. The problem is that a lot of that investment has traditionally been funding extractive, damaging, unethical and unsustainable industries such as fossil fuels, deforestation, arms manufacturing, tobacco and gambling. Europe’s biggest energy companies recently reported record profits for the first three months of 2022; that growth is funded in part by pension investments. Most people paying into a pension scheme are unaware of what their money is being invested in, how damaging it is, and the conflicts with their personal stance on important issues. They are also unaware of how easy it is to switch, and the positive impact that better investment can have.

Many pensions are run through workplace schemes, organised by the employer, just like ours at Leap. As a result lots of people don’t know who their pension provider is (or perhaps they have several pension pots because they’ve had a number of different jobs and not transferred or consolidated their pensions) and what their pension savings are being invested in. For example, Make My Money Matter’s latest campaign focuses on deforestation, sharing the alarming fact that for every £10 you put in your pension, £2 is linked to deforestation. As they rightly point out, “what’s the point in retiring on a world on fire?”

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What if I work for a government or large institution?

If you work for a large institution (local government, teacher, nurse etc) then you may not have any choice over your workplace pension, or feel that you can have any influence over your pension. Divest.org state that across the UK, local authorities continue to invest around £10 billion in fossil fuels through their pension funds, despite more than 75% of councils declaring a climate emergency. As a grassroots movement, they campaign for large institutions to remove their money from stocks, bonds or investment funds that are unethical – divesting rather than investing. As a result of their campaigning, six councils have now committed to fully divest their pension funds away from fossil fuels. And you don’t have to be an employee of your local council to ask them to divest; if you are a local resident paying council tax then you can petition your council. Divest.org have a great tool that will allow you to see how much your local council has invested in fossil fuels (as a financial value and a percentage of their investments), and also shows their position on a league table. How does your local council stack up?

Green is a good investment

There is increasing evidence that investments that are good for the planet and its people are also good investments financially. Sustainable and ethical companies are proving to be more resilient and are increasingly likely to perform better in the long run as society shifts away from harmful and extractive industries towards renewable, sustainable or regenerative practices. Fossil fuel stocks are on a long-term downward trajectory, and this decline will steepen as the energy transition accelerates.

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Whether you are an individual with a pension (or looking to start a pension) or the person in your organisation responsible for your company’s pension scheme, we would encourage you to join us, and a growing number of others, who are investing a green pension fund, and a better future.

www.makemymoneymatter.co.uk