The net zero pension pot – why corporates can’t afford to ignore it

You care about the planet and want your organisation to be a force for good. So you’d have something to say if you discovered that one of your employees was needlessly burning their way through an extra 23 tonnes of CO2 emissions each year.

You’d be doubly outraged if ESG is already a company priority and you’re working to reduce carbon emissions. In that case, the idea that each member of your workforce is personally contributing CO2 emissions equal to running nine family cars is bound to be unsettling. However, the shocking truth is that’s what their pension investments are doing.

The numbers will soon be transparent

A typical UK pension pot finances 23 tons of CO2 emissions yearly. To offset this amount of carbon, each employee would need to plant 30 acres of forest! That’s a massive footprint and makes achieving a goal of personal or corporate carbon neutrality nearly impossible.

The good news is that there’s a revolution underway in the world of pension investments. In part, this is a response to government legislation. It’s a green revolution, and it couldn’t come any sooner. From October 2022, the rules about pension management are changing. Pension schemes will have to measure and publish how their investments support the climate goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.

Soon pension holders will directly see the impact of their not-so-sustainable investments through climate risk reports. And for a workforce that increasingly prioritises the planet, this will be intolerable. The cause and effect of this is that employees will see what’s at stake and favour companies who gave them another option sooner rather than later.

The world’s first net zero pension

Pension funds are already acting to make more responsible investments. While many pension providers have yet to set net zero goals, others are working towards a better ESG strategy. For example, NEST has pledged to go net zero by 2050, and Brunel is cutting half its emissions by 2030.

While this is admirable, it isn’t quick enough. Cushon is the only provider offering a net zero pension right now. Rather than setting laudable but far-off targets, Cushon has leapt ahead of the competition with an immediate net zero option.

Corporate responsibility and environmental awareness

Of course, the drive towards environmentally friendly pension investments is a good idea in and of itself. Looking after the planet is the right thing to do, and any business that wants to be a force for good in the world will be keen to get on board.

So while some companies will make adjustments when they’re forced to, others will proudly say that they are in the vanguard, setting the path towards a kinder, healthier world. It is an opportunity for ESG-conscious companies to become leaders rather than followers.

But there are other prosaic benefits to a company that shifts over to net zero pensions, particularly in recruitment. We live in the age of The Great Resignation, with nearly one in four workers planning to change jobs. The employment marketplace is changing, people are choosier about jobs now, and many potential employees place great value on issues related to corporate social responsibility.

Cushon’s climate change pensions research shows that 68.6% of employees are concerned that their company pension could be investing in business models contributing to the climate crisis. So if your pension plan demonstrates a commitment to economic, environmental and social imperatives, you’re more likely to attract the thoughtful recruits of today.

How to make the switch

It can be tempting for company leaders to ignore this issue simply because they think switching pensions is a difficult task. But perhaps they should be more fearful of the difficulties of not making the switch. Both your existing workforce and the talent you’re looking to attract will want pensions with a positive environmental impact, so can you afford not to make the change?

Ultimately, It’s like doing your tax return. It’s not a fun process, but it’s necessary—for the sake of the climate emergency and your talent pool. It’s also an area where Amba can help. With Lumina Perks, employees can opt in for a net-zero Cushon pension, while with Lumina Gateway and Plus, you have the option to make a Cushon net-zero pension the default provider for your entire organisation!

Book a demo

At Amba, we are proudly pending B-corp certification. We actively support the global movement for an inclusive, equitable, and regenerative economy. As such, we are going for net zero by 2030 and switching all our pensions to Cushon. When it comes to protecting our planet, none of us is doing enough, but we’re on the journey.

To learn more about eliminating your emissions and retaining talent, see how you can reduce your Scope 3 emissions with employee benefits or check out our thoughts on ESG and why it should matter to HR.