Could you be growing your money whilst protectingthe environment?

Social and environmental investment criteria is continuing to grow with interest and expectation.  With many clients looking “to do the right thing” when it comes to their investments, fund managers are constantly looking at the options available to widen the way these accounts can make positive contributions to the world, as well as deliver financial returns.

Environmental, social and governance (ESG) funds are often the go to funds for investors to maintain this sustainability. These three headers identify what most people consider to be good business practice. Environmental; how companies interact with the environment, Social; companies conduct around their communities, and Governance; how they behave in their activities.

New investment reporting signals a potential shift towards pension trustees adopting a holistic approach to ESG factors. However, other opportunities may be being missed. A new survey [1] shows that many UK savers are not aware that they could be investing sustainably through their pension.

The pension pot is of course, one of the more important investments made towards a client’s future life. Can it also now be a tool for building a sustainable future for the world?


Options to manage Pension Funds
A wide range of pension schemes now consider a wider risk of ESG in their investment options, with 89% of funds offering products that not only focus on climate concerns but also impacts on companies’ investment return impacts and the way they handle social situations. [3]. 

Despite the rise in popularity, savers still believe that investing into sustainable companies will be too complex without guidance, despite 36% of people in every age group suggesting that investing pensions in sustainable companies is important to them.

The need for clearly branded fund options seems to be key, to allow people to invest only in environmentally and socially responsible companies if they wish. Two thirds of pension holders said they do not actively make choices about where their pension is invested, and one in ten were unaware there were options to manage their pension funds at all.

Making sustainable funds clearer
It has been identified that if a pension fund suggested links to clean energy and low-carbon transitions, many investors could show more interest in their pension, however currently, people are unaware of the ways they can make their pension environmentally friendly.

When people are made aware of the impact that their savings and investments could have, they potentially will want them to be more sustainable and have a positive impact on people and the planet. They are also more likely to save more if they know their investments are doing something good. [4]  

Increasing transparency and trust are key drivers to deliver this, requiring asset managers to provide clear information on the sustainability profile of investments and pensions. Providing better information makes it easier for investors to understand and engage with their savings, pensions and investments.

Tavistock Wealth launched their ESG Protection Portfolio in 2019 to shield clients from the potentially disastrous consequences of sudden and sustained falls in market values, whilst simultaneously adhering to their ESG investment policy. The portfolio offers investors an alternative, more prudent approach to medium to long term investing. The portfolio has provided clients and advisers with peace of mind amid the volatility witnessed across financial markets.

None of the information contained in this blog constitutes a recommendation that any particular investment strategy is suitable for any specific person.

Source data:

[1] Survey for Scottish Widows conducted between 21 and 30 April 2020 online via the Toluna Panel of 1,346 UK residents aged 18-60 currently contributing to a pension that is not exclusively a final salary policy. Data weighted to be nationally representative.

[2] Research was carried out by YouGov Plc across a total of 5,757 adults aged 18+. Data was weighted to be representative of the GB population. Fieldwork was carried out 26 March – 11 April 2020.