15 Jul New campaign launched to invest pension savings into tackling climate change
Pension funds are being explored as a possible means of providing a source of investment to support the climate emergency. The new initiative called Make My Money Matter was created by the former governor of the Bank of England, Mark Carney, and leading film director Richard Curtis. The initiative is targeting the £3 trillion set aside in the national retirement pot as direct support for tackling climate change.
In previous discussions, Carney had warned that pension funds and other associated businesses potentially risk seeing their assets lose significant value if the climate crisis continues to be ignored. At the end of last year prior to leaving the Bank of England, Carney explained that measures to eliminate the investment into fossil fuels was not happening quick enough and stated that climate change in his own words, was ‘a tragedy on the horizon’ and would result in significant costs to the business that fails to acknowledge and adapt to the challenges.
Under his new role as the UN special envoy for climate action and finance, Carney shows support towards a direct economic transition and believes it represents the biggest commercial opportunity of our time. Curtis, co-founder of Comic Relief, is urging the pension sector to show a clear commitment to net-zero emissions by 2050 and for the Government to make all funds transparent in terms of their progress with sustainable investments. Curtis highlights that for years pension funds have invested into a range of industries that have a considerable impact on our environment on our behalf and are failing to support a better future for us and our planet.
Recent studies have indicated that nearly 60% of UK adults with a pension are wanting to see their savings invested into developing a better future for our people and over 50% want their savings to be directly associated with climate change measures. People are more connected with their investments and want clarity on exactly where their money is being invested. The implications of the pandemic have accelerated this further, with more people caring about the impact of their pension. The challenge, however, is that a large proportion of people still lack any understanding or details on whether their pension is invested in accordance with their values. In a study from This is Money, nearly 25% of people in the UK do not know how to change their pension investment plan.
Carney believes that by placing more emphasis on integrating finance with values in our society, the campaign can support the wider economic transition necessary to reach net zero. Carney highlights that private finance, along with pension funds, is capable of providing $3.5 trillion required each year for direct investment into sustainable infrastructure and supporting further innovation across all industries.
The Make My Money Matter campaign has gained support from the state-operated pension scheme NEST. NEST has recently seen its ethical fund perform better than its regular fund for the last five years. Helen Dean, the CEO of NEST explains that their goal is to enhance the retirements of millions of people and emphasises that this isn’t possible if we continue to ignore the world we will be retiring into. Dean explains that pensions funds provide considerable power and influence over the businesses they are investing in. They have the capacity to drive further positive developments through targeted investment plans to build a better world for the future.
The £3 trillion pension pot is more than sufficient to tackle the climate emergency, along with other challenges facing our nation. However, investing in fossil fuels, tobacco industries and deforestation aren’t necessarily going to support a world we want to live in. The new campaign will ensure people understand their own financial footprint and empower all people to have pensions that are aligned with their values.