How green is your pension?

If you have a workplace or personal pension, your money will most likely be invested in a wide range of companies around the world in different industries. The hope is that, over the years, returns from these investments will be enough to provide for a comfortable retirement.

You might not think much about what investments you hold, but it’s important to consider that a large proportion of the UK’s £2.5 trillion pension industry is invested into fossil fuels, tobacco companies and deforestation projects which damage the environment.

There’s no fixed definition of a green pension, but it’s generally understood to be one that has few or no investments in such industries, ideally investing instead in green energy or companies which aim to provide solutions to the climate crisis. Some define it more generously as a pension that aligns with the values set out in the Paris Agreement, the international treaty aiming to achieve net-zero carbon emissions by the middle of the century. This means that a fund could be considered green if it still has some investments in the ‘harmful’ companies listed above, as long as it has pledged to phase these out by 2050. As a general principle, the more your pension leans towards renewable, carbon-neutral investments, the greener it is.

Author: wpadmin

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