Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
MORE of us are asking what we can personally do to help in the fight against climate change.
Recycling to cut down on carbon use is now the norm and some will even take steps like going vegetarian to reduce their footprint. But are you ignoring the most effective way for you to reduce emissions? Indeed, a way that may need no extra sacrifice in your day-to-day life?
By using the investments you hold to avoid the most environmentally-unfriendly industries you may be able to do more to fight climate change than all the ways of going green put together.
That’s the claim, anyway, of the Make My Money Matter campaign spearheaded by the film director Richard Curtis, famed for Love Actually, Four Weddings and a Funeral and the Comic Relief charity. According to Make My Money Matter, switching your pension to invest in ways that avoid the worst-polluting companies is 21 times more powerful in reducing emissions than giving up flying, switching to a green energy supplier or going veggie.1
It is urging the companies that manage the nation’s £2.6trillion of pension wealth to commit to the target of reducing the net emissions produced by the companies they invest in to zero by 2050. To hit that target, schemes are likely to need to avoid industries that rely on fossil fuels and deforestation.
It’s asking individuals to do their bit as well, by altering their own pension investments if they can or by requesting that the companies running their workplace scheme to adopt the target and provide green pension options.
The quickest change you can make is to any pensions or investments you control directly. That could mean ISAs, personal pensions like a SIPP or money held in investment accounts. You should be able to switch investments simply online - but there are decisions to make.
There are many funds out there offering to invest on an ESG basis - that’s with an eye on Environmental, Social and Governance (ESG) concerns - but each will have their own philosophy and rules. Some will only filter out certain industries but invest in anything outside those filters. Others will look only for investments which make a positive impact on the environment, such as renewable energy and the companies that support it.
If you’re looking to put your workplace pension savings on a green footing, you may have less control but there are steps you can take. Ask your scheme provider whether it offers an ESG option for you to invest your money. If it does you should be able to switch to it easily - although it is always important to ensure your investment remain properly diversified and suitable for your own risk-appetite.
If your employer does not yet offer an ESG option, you can express your interest to your employer so that they can work to add one in the future.
1 Make My Money Matter, October 2021
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55. Select 50 is not a personal recommendation to buy or sell a fund. Please note that an Investment Manager’s focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.
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