How to use your retirement funds to help the UK achieve its net zero carbon emissions


Blocking highways may not be the best way to tackle climate change for most of us, but using your pension may be a more low-key but effective option if you want to take action against climate change. carbon emissions.

Experts have warned that climate change means more than extreme temperatures. Climate Just, a tool for mapping poverty linked to climate change, estimates that food costs could increase by 9% by 2050 or up to 28% if the effect of climate change is greater.

Pension provider PensionBee says it would hit retirees the hardest. Here’s how you could use the power of your pension to help the UK meet its net zero carbon emissions targets and hopefully lower your costs in retirement.

Enjoy your professional retirement

Don’t just accept the default fund when you’re automatically enrolled in your workplace pension plan.

“Read the literature to find out where your pension is invested,” says Julian Parrot, partner at consultancy Ethical Futures.

“Look for an ethical alternative and don’t opt ​​out just because you don’t like the default. Make a fuss and ask your boss to consider a more sustainable option.

Look under the hood

There are many funds with sustainable or environmental, social and governance (ESG) labels, but there is no standard definition of what this means and providers have different approaches.

“Most companies will offer a list of sustainable funds,” says Jeannie Boyle, Certified Financial Planner for EQ Investors.

“Ask to see the companies the fund invests in to see how ‘green’ they are.

Invest to have a positive impact

Many sustainability-focused funds rely on third-party ESG scores to choose companies, which tend to focus on the industry in which a company operates.

But David MacDonald, of consulting firm Path Financial, says it often misses the companies that make a difference and help the transition to a low-carbon economy through impact investing.

“Ethical or ESG funds tend to screen only the worst offenders and often only“ actions of sin, ”he says.

“A more positive approach looks at funds that invest in companies whose products and services are the solution to the world’s problems.

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The DIY approach

Control your own pension fund and invest in environmentally friendly or sustainable stocks with a self-invested personal pension (Sipp). Alternatively, robo-wealth managers such as Nutmeg and Wealthify offer out-of-the-box, sustainable and ethical portfolios. You can also invest in renewable energy projects through a Sipp with the Abundance equity bond platform. Make sure you do your research.

Climatic applications

Use apps like Tumelo and Sugi to find out where your fund is invested and measure the carbon impact. Tumelo allows investors to check which companies are in their repo and report issues directly to their supplier. The Sugi app uses Trucost’s ESG data to show the carbon impact of your pension and compare it with others.

Research tools

Finding a fund that reflects your enduring values ​​can take time. Websites like Fund EcoMarket and Good With Money can help you find funds on specific environmental, sustainability, social and governance topics so that you can understand and control where your money is invested.

Be active

Put pressure on your pension fund to go green with the Make My Money Matter campaign. He says switching to a green pension is 21 times more powerful than ditching the plane, going vegetarian, or changing energy supplier. Find and contact your program provider through the Make My Money Matter website.

Prepare for gray areas

ESG and sustainable fund managers may exclude some stocks due to their use of fossil fuels like oil companies, but others retain a stake so they can try to influence the change.

Julia Dreblow, of the ESG information platform SRI Services, which manages Fund EcoMarket, says it’s important both to redirect money to sustainable businesses and to encourage existing polluters to change their habits.

“There are always gray areas,” she adds. “No company or person is perfect, so you often have to make compromises and make decisions based on judgment. “

“The world will be different”

Hannah Galliers, 30, production accountant, Gloucester

Ms Galliers is already doing her best to live sustainably by recycling regularly, using shampoo and conditioner bars instead of single-use plastic bottles, and switching to a green energy supplier.

She took the opportunity to do the same with her investments when she consolidated her pension funds two years ago. The combination of his pension funds with PensionBee gave him the ability to transfer his money to the online provider’s Fossil Fuel Free Fund, which excludes fossil fuel producers, tobacco companies and weapons manufacturers.

Hannah says she is confident her sustainability-focused pension will perform better in the long run because of the transition to a low-carbon economy. “The world and the economy will be very different when I retire,” she says.

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