Recent research published by Aviva in the UK has found that re-directing the value of an average pension fund (£30,000) from a global equity fund to a sustainable equity fund can save up to 19 tons of CO2 over the course of its life. That is equivalent to driving over 700,000 kms in the average car. It is clear that including ESG in your pension can bring benefits.

But why is this important?

Climate change is already happening. It is worldwide, rapid, and intensifying. Global warming of 1.5°C and 2°C will be exceeded during the 21st century. This is unless deep reductions in carbon dioxide (CO2) and other greenhouse gas emissions occur in the coming decades.

How can we make a difference?

When considering where we can make a difference to the environment, looking at your pension fund is an obvious one with substantial results – especially when you consider the effect of other changes we make to our routine. Let’s take cycling 5km to work each day. Relative to a car journey, you’ll save 120,000 grams of CO2 PA over a 48-week, 5-day week. This is also extremely good for your health.

However, in one year the savings here are 0.12 of a ton, according to (European Cyclists Federation). So you’ll be cycling a while to get to 19 tons.

Our message isn’t to run down one action relative to another. It is to point out where gains, in some instances substantial gains can be made.

Will this impact my returns?

The nicest thing about this from Prudent Environmental Investments’ point of view is that you don’t have to sacrifice returns to make these gains. More and more research as well as our own clients’ experience points to positive outcomes all around.

From a corporate decision-making point of view, taking this course of action with your pension funds is a simple way to very positively re-position your company. This can happen when submitting tenders or submissions for new business.

Our role is to advise our clients on suitable investments. That is after we have had in-depth conversations with them about their goals. Our clients become more engaged in the process when they can see and understand the range of options available, and the effect those decisions can then have.

This is all as relevant whether you are just starting your pension journey or are interested in re-directing some of your funds. Just get in touch if you’d like to have an initial chat about including ESG in your pension.