ESG and sustainable finance in the pensions sector

Conversations around environmental, social, and governance (ESG) and implementing sustainable business practices have been gaining ground in the financial services industry for some time now.

Increased environmental, social, and governmental pressure mean that companies must carefully consider the changes they can make to create a more sustainable business.

What is more, Britons are becoming increasingly conscious regarding the sustainability of their investments and savings – particularly where their money is being spent and the wider impact their investments are having. Naturally, this environmental awareness is beginning to extend to people’s attitudes toward pension planning.

It’s crucial, therefore, that the financial services industry keeps up and ensures savers are empowered to make greener investments that align with their values.

Pursuing an ESG-conscious retirement strategy

Despite growing interest and relatively high public awareness of ESG, very few Britons are incorporating it into their retirement investments. According to My Pension Expert’s own research, just one in six (15%) adults aged 40 and over had even considered ESG in their retirement strategy.

There are varying reasons why pension planners may not be fully engaging with ESG-friendly investments and pension funds. This includes a lack of understanding of what makes a fund ESG-conscious, suspicion of greenwashing, or simply not being a priority – as many people understandably focus on making their pension fund work as hard as possible for them.

However, it is important to note that it is entirely possible to build a solid, impactful pension portfolio from funds that factor in ESG – pension planners would be wise to seek advice from a professional, such as the team at My Pension Expert, to determine how ESG can be incorporated into their retirement planning without compromising their goals.

In terms of their positive contribution to society and the environment, there are many ways in which funds can be ESG-friendly, whether they be investing in renewable energies or finding cures for diseases. Sustainable investing also factors in corporate impact; invested funds can help to address critical global issues such as world hunger, poverty, or healthcare and education inequalities, while businesses that inflict greater harm than good are excluded.

The importance of seeking advice

An independent financial adviser can ensure that savers who are eager to make sustainable, socially conscious investments are empowered to do so.

Seeking financial advice remains of vital importance for savers looking to develop a pension strategy, particularly one that is sustainable and socially conscious. For example, My Pension Expert’s team of independent financial advisers will consider the entirety of a client’s financial situation and preferences, which includes their ESG preferences, values, and ethics. This information will subsequently be factored into a tailored strategy designed to suit their specific needs and to help them achieve their retirement aspirations.

Indeed, there are a variety of ESG-compliant and sustainable funds available to clients at My Pension Expert, depending on their individual values, but it is key that savers select a fund that will suit their circumstances and help them to attain the lifestyle they want.

With the support of independent financial advice, savers can be confident that their pension plan wholly aligns with their values without compromising the comfortable retirement they deserve. What is more, they can be secure in the knowledge that their chosen funds are not only for the benefit of their pension pot but also to society.