New research from Scottish Widows has revealed that 72% of UK employees say it is important that their employer offers a “responsibly invested” pension.
Yet despite this demand for responsible investing, 47% don’t know whether their workplace pension is actually invested responsibly or not.
Scottish Widows’ Responsibly Invested Pensions Report surveyed more than 6,000 employees, employers and financial advisers, to better understand their views of Environmental, Social and Governance (ESG) related issues.
“When asked about the biggest issues facing society today, the cost-of-living crisis topped the list for almost two-thirds (63%) of employees, with 49% believing this will be the biggest issue society faces five years from now,” said Scottish Widows.
“Other important environmental-related issues, including climate change (44%), plastic waste (37%) and water pollution (33%) closely followed as top concerns for employees.
“Social issues – including diversity, equity and inclusion – were also seen as some of the biggest societal issues among younger respondents (29% of those aged 18 and 34 vs 18% of those 55+).
“As a result, not only do 72% of people believe it is important that their current employer offers a responsibly invested pension, but 70% said their employers’ social responsibility credentials or benefits were important in choosing their current role.
“Younger employees place an even greater emphasis on responsibly invested pensions.
“Over three-quarters (79%) said it is important for their employer to offer a responsibly invested pension, compared to 61% of those aged over 55.
“People don’t just want their employers to ‘talk the talk’ when it comes to responsible pensions; two-thirds (64%) expect their employers’ environmental and social responsibility commitments to be reflected in their pension portfolios.”
While the report highlights strong employee demand for responsible pensions, lack of awareness and education remain key barriers.
About 61% don’t know how to switch from their default pension to an alternative investment option that may be better suited to meet their objectives.
Last month Scottish Widows announced that it was embarking on a new strategic partnership with leading asset manager Robeco to shape its investment offering for UK pension savers, with responsible investing fitted as standard.
Eva Cairns, Head of Responsible Investment, Scottish Widows, said: “Employees are increasingly seeking to make sure their investments – including pensions – deliver financial return while considering the impact on people and planet, and there is clear demand for more responsibly invested options.
“We know pension savers are concerned about financial security and believe that considering risks and opportunities related to ESG can help build more resilient investment portfolios – but it’s also about contributing to a more sustainable future, tackling some of the societal issues people care about.
“There’s still a big knowledge gap to tackle, and employers should not only offer responsible pensions, but also do more to empower employees with the information they need to make more informed decisions.
“We’re committed to helping bridge this knowledge gap and ensuring that every pension saver can invest with confidence in a way that reflects their priorities, whilst also delivering the best possible return on their investments to ensure they are financially set up for their retirement.”