Less than a quarter of people in workplace pensions aware of ESG-related options

Under a quarter (23 per cent) of people in a workplace pension are aware of their ESG-related options despite an increased interest in sustainability, a new report from Secondsight has revealed.

The report, Workplace pensions and ESG, of 1,000 UK investors, also found that 60 per cent of respondents did not know what ESG investing is.

The survey did, however, find demand for ESG investing. After being given an explanation of what ESG was, 42 per cent of respondents would be happy to be auto-enrolled into an ESG fund.

The research found that young people were most willing to be enrolled and potentially pay more for a sustainable workplace pension. Two-thirds (67 per cent) of 20-30 year olds and 73 per cent of 31-40 year olds stated they would be willing to pay more to be in an ESG-focussed default fund, compared to just over a third (36 per cent) of 51-60 year-olds and 29 per cent of over-61 year olds.

The report also found that almost two-thirds (63 per cent) of those surveyed have changed their minds over the past three years about the importance of the environment. Just over half (51 per cent) felt strongly about the impact that climate change could have on their savings and investments.

Also, while the study found that only 25 per cent of people had made any investments with ESG factors in mind, 68 per cent of non-ESG investors said they would be willing to consider investing sustainably.

Secondsight partner, Matthew Mitten, commented: “Despite clear interest from younger people in sustainability issues and how financial decisions are impacting the planet, there is a lack of awareness around ESG investing and the available options. This issue is particularly acute when it comes to workplace pensions.

“Our research highlights that younger people are more interested in sustainability than the older generation and would support investing sustainably and having an ESG fund as their default pension fund option. By starting at a younger age, this could, over time, contribute towards supporting sustainability causes through their investments.

“Making sure that employees have all the information they need to make decisions about their pension is vital. There is a clear disconnect between people’s opinions on sustainability and their awareness of what financial decisions are available to them that can put that into practice.

“Employers can help raise awareness of ESG in pensions in several ways, such as engaging with their pension provider to find out what actions they are taking around ESG and speaking with employees directly about their thoughts on sustainable investing.”

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