Supported by PensionBee

A true ‘ethical pension’ is here, and it might just help save the world

By Oliver Smith 26 October 2017
Image: Getty/sturti.
Summary

Where will you invest your money?

As we’ve explored before, your pension pot is likely being invested in some rather unsavoury places, from arms to oil and tobacco.

That’s because – and you might not like it, but – these industries are generally safe, profitable places to put your retirement money.

Even so-called ‘ethical pensions’ often aren’t, still making questionable investments in order to deliver on their returns, or, if they are truly ethical, you’ll often pay through the nose for the privilege.

But that could be changing.

Image: Getty/franckreporter.

Rise of ethical investments

With businesses and the corporate world becoming more green and responsibly-minded, smart ethical investments have never been more on-trend.

A recent comparison of ethical UK investment funds by the Investment Association, found they actually outperformed the average UK equity fund by 8.5%.

Part of the reason is that traditional investments like oil and energy are suffering, as the world moves towards renewable power and more economically-minded utilities.

In the home, the likes of Ovo Energy, which sources 33% of its energy from renewable sources, and Bulb, which is 100% renewable energy, are leading the trend. While on the roads carmakers are going increasingly electric, led by the likes of Tesla and Nissan.

The other part of the ethical investment story is because many more huge companies today know the future is about ‘going green’.

Whether it’s Apple using 96% renewable energy from solar panels and encouraging its suppliers to be better corporate citizens, or Boeing which has held its levels of greenhouse gas emissions, water use and solid waste to landfill flat since 2012.

The ‘pot’ of ethical companies to invest in has never been bigger, and the smart money is quickly following.

The smart money

In 2007 independent ethical research group Vigeo Eiris found the market for green and ethical funds in the UK was only worth around £8.9bn, in 2016 a similar calculation found that market had grown to reach £1.5 trillion with no sign of slowing.

Just last week PensionBee, the online pension provider, launched its own Future World pension, tapping into this future trend.

“Environmental issues are at the front of people’s minds and this doesn’t stop at everyday purchases,” said PensionBee CEO Romi Savova.

Future World, a fund managed by Legal & General, invests in companies that generate their money from low-carbon activities, including the likes of Apple, Microsoft, Google and Boeing.

But it’s more than just an option for the ethically-minded.

Savova believes the funds pouring into ethical investments like hers are helping make the world a better place, providing: “the powerful message that polluting companies have to step up their game and move to a low-carbon economy.”

Because, for those saving, who wouldn’t want their pension money used to help create exactly the green, ethical future they want to retire in.