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06 Sep 2023
by Steve Watson

5 ways to use ESG in pensions to drive employee engagement

If pension savers could see the good their investment was doing in the world, they’d be better engaged in making financial decisions

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ESG (environmental, sustainability and governance in pensions is about getting people closer to the underlying assets their pension savings are invested in. 

It’s not about telephone numbers on an annual pension statement, it’s about getting employees to understand that their pension could either be doing good or bad in the world. ESG is about making pensions a force for good while delivering best results for members.

ESG + pension engagement = result

ESG is not just about responsible investing; it’s also about increasing employee engagement, which in turn should have a positive result for members. Engaged members are more likely to make good pension decisions.

The average UK pension pot is responsible for financing tonnes of carbon emissions every year. To balance the scales and even out each employee’s carbon footprint would mean taking nine family cars off the road or planting 30 acres of forest. Or, to make things easier, you could switch to a more sustainable pension and have a hand in thousands of ESG-friendly projects.

Most employees don’t know they can do this. By increasing your employees’ engagement with their workplace pension – and including some financial education while you have their interest – you can increase overall employee outcomes, satisfaction and productivity. 

Employees want more ESG

Cushon research shows that employees in the UK would be receptive to a more ESG-friendly pension:

  • 69% of employees are concerned that their company pension could be invested in businesses that contribute to climate change
  • 62% of employees would engage more with their pension if it made a positive impact or was doing good in the world
  • 88% of employees want their employers to take action through their workplace pension to address sustainable issues

5 ways to use ESG to drive engagement with pensions

It’s up to providers and employers to make it easy and interesting for them. 
Here are a few rules of thumb to follow that should help optimise engagement with ESG: 

1. Tell them how they are making a difference

So don’t just stop at telling someone that their pension is being invested responsibly, tell them about the biodiversity it is helping to create, the reduction in carbon emissions and the local communities your savings are helping to support..

2. Connect it to personal life 

Put your people in the picture to make them feel personally responsible for the good their pension is doing. It could be overt, like giving them an active choice in ESG investment options, or it could be more subtle, like showing an employee that their pension is being used to build a wind turbine. 

3. Include practical money guidance

If you can get people’s attention with ESG, you have a wonderful opportunity to break the British taboo of not talking about money. You can talk about investments, savings and pensions without people shutting off, so use this opportunity to share some practical financial education. After all, 60% of employees say money worries have a negative impact on their performance at work.

4. Match ESG to your company values

ESG comes in all flavours, especially in the world of pensions. That means you can hone in on what’s important to your business and align your pension’s investments accordingly. For example, a fashion brand might focus on ethical work practices – no sweatshops – while a construction company focuses on sustainable logging. 

5. Keep people talking

Ultimately, it’s in your best interests as employers to have your employees engage with their pension. To an extent, the happier they are, the longer they’ll stay with you. 

So give them plenty of opportunities to share that happiness and subtly remind themselves why they’re grateful to work for you. Start conversations and fuel the fire. Try email newsletters, posters around the office, or a regular slot as part of your monthly all-team meeting. Get creative and see what works.

In partnership with Cushon

Cushon is an online savings&investments platform provider, offering holistic workplace savings.

Contact us today