Communicating about climate aware investing can be “a way into” engaging with members, according to Pensions and Lifetime Savings Association (PLSA) chair, Richard Butcher.

Speaking at the PLSA Annual Conference 2020, Butcher said he believed in keeping messaging “as simple as possible” to show what tangible good members’ money could be doing as part of a pension scheme.

This followed the PLSA's publication of a report into how a system wide approach might help schemes to overcome some of the barriers to them embracing climate aware investment.

Butcher said: “What we are dealing with as pension schemes is delayed gratification. You put in your money now, suffer the pain of loss of income and then at some point in the future you will get some of that money back. Logically we are just not very well geared up to do that sort of thing.

“I think the beauty of climate aware investing, just through this particular lens, is that it allows us to bring some of that gratification to the front. People like to be able to feel things, they like bricks and mortar, so if we can give them tangible benefits it brings some of that gratification into the current time.”

West Midlands Pension Fund director of pensions, Rachel Brothwood, said climate change actually offered the industry a chance to rebrand through communication with members, noting that “if people take more of an interest in their pensions because of climate change that has actually got a big benefit for us”.

She added: “Engagement is vital for long-term and meaningful change, and we have to be very careful to not jump to quickly. We want simple communications but we haven’t actually got a lot of data and evidence and frameworks that can give us the answers at this stage.

“We need to make sure that the frameworks and the investment tools are developed, and there are a lot of investment initiatives that can help you do that, so that we can meaningfully report outcomes and demonstrate to our members that these strategies are making a difference.”

Make My Money Matter chief executive, Tony Burdon, agreed that “part of communicating effectively is trying to translate the complex into simple messages” but warned that “there are risks to this sort of communication” because of the complexity of the issue.

Burdon continued: “The UK is one of the most generous countries in the world when it comes to giving to charity, so there’s a public consciousness and people actually do want to do good where they can. The thing is I think their pension can do that. Their pension can help build a better world if it’s aligned with net zero and if there is strong environmental, social and governance investment across the portfolio.

“These things are all possible, so people should see it as a tool to both do good while building a good retirement income for the future. This makes engagement really key. It’s a challenge because financial literacy is a challenge in the UK as well.

“I’d really like to see much more of this built into the curriculum of children at schools, so when they leave they understand what investment actually looks like and how it works.”

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