REBA’s Inside Track: why the Green Pensions Charter could be a turning point in pensions engagement

The need to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change is pressing.  

REBA’s Inside Track: why the Green Pensions Charter could be a turning point in pensions engagement

Just this week, we’ve seen shareholders vote climate activists onto the board of oil giant ExxonMobil and Dutch courts order Royal Dutch Shell to speed up its action on carbon emissions, after pressure from climate campaigners.

Society, individuals and businesses all have a role to play in bringing about change and inspiring action.  And with the 26th UN Climate Change Conference of the Parties (COP26) being held in Glasgow in November, momentum is ramping up.

But what does this mean for employers’ reward and benefits?

For me the impact is two-fold, first employee benefits and, in particular, pensions, will take on a new meaning. Workplace pensions will no longer just be about financially securing employees’ retirement, they will also become a key tool to enable every employee to actively invest in the future of the planet.

Second, workplace pensions will reinforce employers’ purpose and values by supporting investments that match their own environmental, social and governance (ESG) goals.

Together these two elements can be leveraged to not only increase employees’ engagement with pensions, but more broadly with the organisation in which they work.

We already know that public interest in climate change is high. Cushon’s Pension Funds and the Climate Crisis (2021) research data shows that 84% of employees are concerned about climate change, with two-thirds (62.9%) stating that they would engage more with their pension if they knew it was making a positive impact on climate change.

There is a clear demand from employees for ‘greener’ pensions. And many organisations are already responding to this call.

The Green Pensions Charter was launched earlier this month by Make My Money Matter and Count Us In. The Charter has already seen organisations including Ikea, Octopus Group, EY and Brewdog commit to work with their pension provider and trustees to secure a green pension, and support the growing call for all providers to commit to net zero emissions targets in the lead up to COP26.

Richard Curtis, filmmaker and co-founder of Make My Money Matter, said: “This Charter supports the growing demand across society for pensions we can be proud of, and acts as a critical reminder to the industry that the £2.6 trillion circulating in UK pension schemes must be invested in ways which build a healthy planet, as well as deliver healthy returns.”

Chris Hulatt, co-founder at Octopus Group, argued that by investing pension funds sustainably there is an opportunity to create a green economy and address the climate crisis.

“People are becoming so much more aware and conscious of the actions they can take to protect our planet – allocating your pension to areas that can really make a difference needs to be part of this movement,” he said.

The ability to build a more sustainable world comes back to the idea of organisational purpose. If employees can truly believe in their organisation’s purpose and values, which are supported by the businesses approach to pension investing, engagement will surely follow.

Last year we spoke to Evelyn Doyle, HR director at Patagonia, about working for a purposeful organisation.

As she explained: “For me, it makes absolute business sense to put purpose first and not at the bottom.

“Most businesses are operating with a profit-only model, and purpose is somewhere down here and we’re [HR professionals] all trying to reinvent nice models of wellbeing to put in place to make purpose work. But if you really do good business, it makes good business sense because you’ll have a really engaged workforce, a really profitable business – Patagonia has proven that – and you can take care of the environment.”

The movement towards ‘greener’ pensions has the power to reset employees’ engagement through capitalising on people’s desire to make a difference to climate change. With examples such as ExxonMobil and Royal Dutch Shell now so high-profile in the mainstream media, employers have a unique opportunity to show their commitment to addressing climate change for the benefit of their staff, business and the planet.

The author is Dawn Lewis, content editor at REBA.

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