In 2021, the key trends in sustainable investing are transparency and clarity. Retail investors, in particular, want more information about the environmental impact of their investments that is easy to digest and helps them make more informed choices. What’s more, they want it from their investment platforms –not just their advisers.
However, it’s not only the retail market that’s demanding more. Earlier this month, HSBC became the latest company held to account by its investors over its environmental commitments. Over 100 of HSBC’s investors filed a shareholder resolution requiring the bank to disclose how it will reduce its involvement with the fossil fuel industry on a timeline aligned with the goals of the Paris Agreement. Although HSBC had already publicly committed to a net zero target by 2050, it had failed to provide any concrete detail about how it would achieve this.
Alongside 117 individual investors, the resolution was signed by 15 institutional investors, including several UK pension funds, representing £2.4 trillion in assets. One signatory, Brunel Pension Partnership said, ‘Without a credible transition plan, the net-zero ambition isn’t a new and improved recipe for the bank, it’s just new packaging.’ *
With 33.4 million UK adults holding a pension – accounting for around £3 trillion of investments – UK pension funds have a critical role to play in driving change. They have a responsibility to use their position as large institutional investors to demand higher standards of the fund managers they invest with. They also need to better engage their members –helping those millions of UK investors understand how their money is being invested, and giving them more choice and voice to exercise their preferences.
For campaigns like Make My Money Matter – which aims to move the £3 trillion invested in UK pension schemes away from harmful assets and into more sustainable investments – member engagement is key.
In order to successfully drive a green, sustainable recovery from Covid-19, Make My Money Matter wants to enable pension holders to invest in line with their values and ensure their providers actively lead the way on sustainable investment. Over two-thirds of UK savers want their money to consider the impact on people and planet as well as profit, and now is the moment for the industry to act.
To do this, schemes can increase the positive impact of their investments by committing to halve emissions before 2030 and pledging to go fully net zero by 2050 at the latest. They can also work to ensure there are no potential links to deforestation in their portfolios – reporting annually on their progress to members and the broader public.
Transparency in investing also sits at the heart of Sugi. That’s why we created an app to show everyday investors how green their investments are and help them build a greener portfolio.
Once everyone can access the information they need to understand sustainable investing on their own terms, we should see many more people investing for the good of the planet. And with a growing focus on the finance sector ahead of this year’s critical COP26 Climate Summit in Glasgow, the battle to make our money matter couldn’t come at a more important time.
A big thank you from us at Sugi and Make My Money Matter to the institutional investors who used their position to make a difference.