People are choosing to work for employers that provide ‘green pensions’, according to new research from Scottish Widows.
Data from the pension, investment and life insurance provider’s first Green Pensions Report, released today (Oct 3), reveals the views of employees and employers relating to sustainable workplace policies and individual practices.
Across the UK workforce, eight out of ten employees (83%) view climate change as an important issue – expecting their employer to take an active stance on ESG issues and implement sustainable workplace practices.
One quarter (24%) of employees cited support for more sustainable personal finances – including green pensions – as one of the top four benefits that they expect from a new employer, alongside flexible working (48%), cost-of-living support (39%) and an attractive holiday package (34%).
Offering Green Workplace Pensions Could Attract Talent
72% of workers said that it was important their employer invests their savings sustainably, as part of their organisation’s overall stance on critical environmental and social issues.
With a third (32%) of workers currently seeking new employment – and a further quarter (24%) planning to apply to new jobs in the next year – the data suggests that the provision of more sustainable pensions may provide a new way for employers to attract and retain talent.
Despite this sizeable employee demand, only a quarter (25%) of employers claim to be knowledgeable about green pensions. More than a third (37%) of employers claim to not know anything about them or have never heard of them.
In fact, nearly half of employers (43%) identified a green pension as a fund that avoids investments in highly polluting industries, such as oil or thermal coal projects. But only a fifth of employers (22%) acknowledged the social and governance outcomes, such as the equitable treatment of workers or promotion of gender and racial diversity on corporate boards (17%).
With over a third (34%) of employers admitting they don’t currently offer a sustainable pension scheme to their employees, there is a significant commitment gap on implementing workplace policies that positively impact ESG issues.
Maria Nazarova-Doyle, Head of Responsible Investments at Scottish Widows, said: “Today’s workers expect employers to show true leadership and offer pensions which are invested responsibly. Demonstrating a genuine commitment to ESG priorities is not only the right thing to do for the planet, it could also be a game changer for attracting and retaining the best talent. Business leaders have a real opportunity to show staff that they are serious about doing the right thing.”
Many companies remain unaware of how their current employee pension schemes can undermine the progress they are making to develop more sustainable operations, primarily due to sizeable investments in high ESG-risk sectors such as coal, oil sands, and tobacco.
This follows Scottish Widows’ recent work with Make My Money Matter (MMMM) on their FTSE100 emissions report, which estimated that the pension schemes of the UK’s largest companies could be responsible for seven times more emissions than those caused through their own operations in the UK.
Scottish Widows – which looks after nearly £190bn of savings for more than six million customers in the UK – offers customers sustainable fund choices, while challenging the companies it invests in to behave more sustainably and responsibly.
Earlier this year Scottish Widows also launched its Climate Action Plan, a clearly defined strategy for long-term decarbonisation and a net-zero portfolio by 2050. It then pledged a further £1.5 billion worth of divestments, bringing the total to £3 billion, in a major new update to its exclusions policy.
Employers who are concerned about the environmental impact of their workplace pension schemes should speak with their providers, who can offer tailored financial information for employees to invest sustainably. Employees can also use free services such as Scottish Widows’ Find Your Impact tool to determine the ESG profile of their own pension, helping inform more sustainable choices.