Businesses have a hidden climate superpower

Richard Curtis, The Independent

When we were working towards the Live 8 Make Poverty History campaign, we tried to meet a group of business leaders. My memory is that it took a long time to organise — and that when it finally happened, 10 people in suits turned up, all men. It didn’t go well. They looked at us as though we were dangerous card-carrying communists and couldn’t see how the campaign had anything to do with them.

But that’s all changed. Over the past 20 years, a huge number of companies have awoken to the power of business to do good. By putting people and planet at the heart of their business, companies have shown that you can pursue purpose and still make a profit.

But here’s a strange thing — very few of them have thought about using one of the most powerful tools in their arsenal: their company pension.

It’s as much of a surprise to me as it is to you that I’m writing about pensions. I hadn’t even thought about my pension until recently: I imagined it was just sitting in Gringotts — slowly accruing a bit of interest through some financial alchemy — and I hoped it wouldn’t bother me very much along the way.

But as I’ve looked into it, I’ve seen the extraordinary potential our pensions have; not just to build healthy returns, but also to build a healthy planet.

There’s £3 trillion pounds in UK pensions (yes — trillions), and research shows that moving your pension from an ordinary “default” fund, where most of us are, to a greener scheme is 21 times more powerful at cutting your carbon than giving up flying, switching energy provider and becoming a vegetarian combined.

But despite there being such power in pensions — this massive pool of money that could be invested in making the world safer and greener — businesses are failing to take advantage. Out of FTSE 100 companies, 95 have shiny sustainability plans, but only five of those plans mention pensions — despite the fact that company schemes are adding £20bn into the pension pot year after year.

It’s a huge amount of money that could be being invested in renewable energy, in affordable housing, in brilliant planet-friendly start-ups — but instead is often invested in fossil fuels, cigarettes, arms or gambling.

Having renewable energy in your office is great, and vegan food in the canteen helps, but why would any business take these steps and then still have a pension undoing all their hard work behind the scenes?

Anyone who thinks pensions are inconsequential should think again. At Make My Money Matter, we’ve looked at the carbon footprint of the FTSE100 companies and compared this to the financial footprint of their pensions. And the results are staggering.

Emissions financed by pensions are seven times higher than the emissions of the companies who own the pensions. That means for every tonne of carbon your company produces, your company’s pensions could be financing seven times more.

So what can we do about it? Well, for a start, let’s talk about it as much as we can. If you’re reading this — check where your pension stands. Let’s get everyone to ask the question: where’s my money invested, and what kind of impact is it having?

I was recently introduced to the brilliant Deborah Meaden — of BBC’s Dragon’s Den — and was interested to find that her passion for green pensions is almost as big as mine and that she believes this is an enormous and necessary conversation.

In Deborah’s words: “As greenwashing runs rife through industries worldwide, companies run the risk of accidentally undermining the good work that they may be doing to operate more sustainably. I know first-hand that businesses now see sustainability as a core part of their operations and recognise their responsibility in saving our planet. But I also see businesses make green claims that don’t always stand up.

“Whether intentional or not, their work on sustainability can go to waste through the harmful investments within their company pension scheme and they must not ignore this huge opportunity to become true climate leaders.”

Because by putting pensions to work, businesses will not only help fight the climate crisis, they can also inspire and engage their staff, many of whom are more determined than ever to make their money matter. A whopping 72 per cent of employees now want their company to invest their pension sustainably. I’m surprised it’s that low — I can’t see why any young person joining a company would not say — “well of course I want a sustainable pension”.