The world is looking to the UK for leadership: from our government, our artists, our unions.
One area with enormous, untapped potential to turn the tide is finance — and specifically, pensions.
Yes, you read that right. Pensions.
£2.6 trillion is invested in pensions in the UK alone. That's our money. It does not belong to hedge fund managers, or government, or billionaire CEOs worried about the size of their rockets. It belongs to every single citizen saving up for the future. To us.
And yet, much of it is funding companies that profit from the rising seas and suffering caused by the burning of fossil fuels.
Let me say, quickly, that the Equity Pension Scheme is brilliant. If you're on a job, your employer has to add a contribution to your pension. That means you actually get paid more money every week than if you don't have one.
However, it is standard practice for the people who invest and grow our money — like Equity's fund manager, Aviva — to put it into industries that might appal you: Coal, Oil, Gas. Airlines, Tobacco, Weapons.
When Leila Mimmack (Young Members' Councillor) and I discovered this in 2017, we started a campaign for Equity's pension scheme to cut ties with the fossil fuel industry and invest, instead, in a secure, liveable future. To move our money out of the problem and into sustainable solutions. After all, every member has the right to live and work in a safe environment. And what's the point of retiring into a world on fire?
Equity has shown great leadership in meeting the moment. After years of negotiating with our fund manager Aviva, and wrangling with the monumentally complex pension system, the Equity scheme is changing for the greener. For every member currently in the 'default fund' - the standard fund you're put into automatically when you sign up for a pension — they will be moved to a new, lower-carbon default, called DAF2.
If this applies to you, your money will be at no greater risk. DAF2 has the same risk profile as the old default. But crucially, DAF2 takes into account the existential threat to our safety and savings posed by climate breakdown. It tilts investment away from companies that do poorly, including airlines, car makers and banks, opening up space for those providing solutions.
Equity is in good company. The UK's biggest pension fund, Nest, with nine million members, has banned investments in coal and Arctic oil. Meanwhile, Norway's sovereign wealth fund, which manages $1tn of assets, has dropped fossil fuels and adopted a legal requirement to invest in renewables.
DAF2 is by no means perfect. It still invests in some fossil fuels and doesn't go far enough to meet the 'code red for humanity' that has been sounded. The time for targets without action has long since passed. As Emma Boyd, head of the Environment Agency said this week: 'Adapt or die'. So our goal is still for Equity to have a default pension fund that is completely fossil-fuel free.
However, this is a step in the right direction. Along with the Musicians Union and BECTU, who are making the move with us, our pension pot is worth approximately £200 million. Collectively, we have great power. And we will be holding Aviva to account every step of the way.
In the meantime, you have more far more ethical options as an individual. If you want to take action personally, email andrew.barker@hencilla.co.uk, Equity's pension broker, for advice on how you can switch to an 'ethical fund'. The Liontrust Sustainable Future range, for example, does not invest in dirty fuels and actively puts your money into building a safer, fairer world. What's more, research shows that greening your pension is 21 times more impactful than giving up flying and going veggie combined!
We know pension stuff can be boring and intimidating. For an easy step-by-step guide on how to go about this, join a Zoom call with us at 7pm on Monday 25th October. Sign up by emailing Equity for a Green New Deal here: equity4gnd@gmail.com.
Will Attenborough, Equity for a Green New Deal
Equity for a Green New Deal and the writers of this article are not investment advisors, and make no representation regarding the advisability of investing in any particular company or investment fund.
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