8 August 2022
A survey of 10,000 UK employees highlighted that while only 1 in 6 said that investing ethically is an important factor when investing over the long term, around three quarters said they would want to avoid investing in companies involved in certain unethical practices.
Employees were asked if they would consider placing their savings in companies that invested in 9 controversial topics. Using child labour, harming the environment and treating employees poorly were the three top areas that people said they wouldn’t invest in.
This conflict in responses seen in the survey is played out in practice in many DC pensions schemes as typically less than 5% of a scheme’s assets are invested in ethical investment offerings available to their members.
The survey once again highlights the disconnect between what pension scheme members say they want and what they are actually doing. When asked what are the most important factors to consider where to invest your money for the medium and long-term, maximising investment return and the ability to make changes to investments easily came top after ease of access. Clearly members do not feel either of these are true at the moment as in many UK DC schemes less than 10% of members select their own investments.
Nigel Dunn, Partner at LCP, commented: “The fact we aren’t seeing many pension scheme members taking up options to invest ethically doesn’t mean that people don’t care about ethical issues and indeed this would go against the grain of the shift in attitudes that we are seeing in society.
“It is more likely that people lack the financial know-how and is another reminder that as an industry we need to tone down the jargon and give members simple clear guidance to nudge them towards making decisions that are in their best interests. With pensions dashboards are now on the horizon, we have a real opportunity to reboot pensions for the modern world and give members the experience they are used to in all other areas of their life.”