Richard Curtis, the director behind box office hits including Love Actually and Notting Hill, has joined forces with the former governor of the Bank of England Mark Carney to launch a movement calling on millions of Britons to examine where their pension money is invested.
Make My Money Matter, spearheaded by Curtis, who is also a co-founder of Comic Relief, aims to help people achieve “a pension that they can be proud of”. Mark Carney, who left the helm at the Bank of England in March and is now the United Nations’ special envoy for climate action and finance, was involved in the campaign launch.
A significant proportion of the £3 trillion that is held in UK pension funds is invested in companies linked to fossil fuels, tobacco, and arms, including three of the top 10 companies in the FTSE 100 index – Royal Dutch Shell, BP and British American Tobacco.
ESG (environmental, sustainable and governance) investment funds offer pension savers the chance instead to sink their money into a wide range of companies involved in activities with positive benefits for the environment or for society.
Curtis says: “Our pensions are powerful, and we must use that power to build a better world. The £3 trillion in our UK pension pot is more than enough to take on the climate emergency, bring hundreds of new drugs to market, or help solve the housing crisis.
“Make My Money Matter will help people understand their ‘financial footprint’ and empower us all to have pensions we can be proud of.”
As well as urging individuals to take action to find out which companies they are investing in through their pension, Make My Money Matter is also calling on organisations to make sure the pensions they offer employees align with their values, and for pensions fund trustees to set out plans to increase the positive impact of investments and to commit to achieving net zero emissions by 2050.
Additionally, the campaign urges the government to stipulate in the forthcoming Pensions Bill that all pension funds report on emissions projections for 2050 and their alignment with the Paris global climate agreement pact.
The diversity of ESG investment opportunities available was outlined by Mike Fox, head of sustainable investing at Royal London, whose investment funds scooped several of this year’s Money Observer Fund Awards, when he was interviewed in the latest interactive investor Funds Fan podcast.
Fox said: “We try to find companies with products and services that have social or environmental benefits to them. So, we tend to be very interested in healthcare, technology, engineering, chemistry: areas that offer long-term innovation. These sectors have done extremely well – particularly healthcare and technology – through the Covid crisis.”
Research commissioned by Make My Money Matter questioned 4,421 adults and reveals that more than half of respondents (57%) want their pension to be invested in building a better future for people and the planet post-coronavirus, while a similar number (52%) want their pension to be part of the solution to climate change. However, nearly three-quarters (72%) of those with a pension either do not believe their pension is invested in line with their values or don’t know where it is invested at all.
Those who have concerns that prioritising their ethical principles could mean they have to accept lower returns on their pension money should study the numbers and consider the performance of ESG investments.
For example, ESG investments demonstrated resilience during the coronavirus market sell-off, which began in late February. This is in part owing to the fact that they lack exposure to oil and gas companies, which suffered during lockdown.
It also reflects the fact that companies with strong ESG values also tend to be better managed. Fox says: “We think that bad governance means that the business won’t be run in the interest of investors.”
However, finding the right ethical or ESG fund is not as straightforward as it seems. This month, Money Observer published an article by private investor Victor Smart, who addresses some of the complexities, including how you define “ethical”.
Smart said he felt he “should take responsibility for the choice of businesses [his] money is helping to finance”, and his article details his search for an ethical fund for his pension and Isa. But he adds that the actual process of switching into the ethical pension fund option took him “less than three minutes on the website”.
It is important to carry out research before making any pension changes, and if necessary to consult a financial adviser.
Our parent company interactive investor publishes its ACE 30 preferred list of high-quality ethical investments. For more details, visit the website: https://www.ii.co.uk/ii-ace-30