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NEST: ‘Nowhere for interest in ethical pensions funds to go but up’

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Paul Todd, assistant director of investment at the National Employment Savings Trust (NEST), which was set up to facilitate automatic pension enrolment, looks at the growth, challenges and opportunities of the ethical pension market.

As consumers, making ethical choices is rarely a clear cut thing – if I want to buy or save into something badged ‘ethical’ how do I know its idea of what’s ‘ethical’ is consistent with my idea of ‘ethical’? How can I be confident I’m buying into something that matches my values?

These are legitimate, if difficult, questions. But this shouldn’t mean those looking for ethical choices should avoid looking altogether.

Similarly, we think that those responsible for designing products shouldn’t sidestep the challenges, but look to meet the growing demand and be prepared to answer probing questions.

The UK ethical consumer market was worth £54 billion in 2013, more than triple the size it was just over a decade ago. Consumer demand for ethical products has continued to grow, even during the recession.

This trend may not have yet translated into a significant take-up of ethical pension funds. But that doesn’t mean the demand isn’t there.

Low take-up is more likely a symptom of a wider issue – mainly the fairly commonplace misconception many people have about what happens to their money when it’s in a pension.

Many of those enrolled into a pension scheme by their employer don’t realise a pension is invested at all. If they did, the concept of investing is still quite far removed from their day-to-day interactions with shops and businesses.

The government reforms that automatically enrol people into pension schemes bring millions more people into pension saving. As their pots begin to build up, we expect there to be more interest in where that money is going.

So while this may be a slow burn, evidence from the consumer market suggests there is nowhere for interest in ethical pension funds to go but up.

We’ve spent a lot of time researching and learning about our future members. What we found is that members want the option of having a choice over what happens to their money. There is also a clear desire for many to be able to invest according to ethical or religious beliefs.

But research also tells us that too much choice is debilitating and disempowering, leaving savers simply overwhelmed and less likely to make any choices at all.

Offering NEST members access to ethical investments is therefore important, but forcing members to choose between numerous different ethical options is likely to be counter to what they need and want.

That’s why we offer a single ethical option which we’ve designed carefully to take account of the ethical concerns of what we know our members care about.

So what are those ethical considerations?

Interestingly, the research we’ve carried out indicates that people are not as concerned about traditional ethical no-go areas like alcohol or gambling. The main things people were concerned about were social in nature and often global in scope.

Labour rights in the UK, human rights abuses, child and forced labour, corrupt regimes and, to a lesser extent, environmental and ecological damage.

Excluding companies on the basis of bad practice in any of these areas is an obvious pre-requisite for our Ethical Fund. But equally important is positively reinforcing good behaviour through proactive investments and engagement.

Property, for example, is one area where shareholders can help drive greater environmental sustainability, improve communities and tackle social problems.

NEST’s Ethical Fund has around 20% allocated to UK property through the GRESB green star-rated Legal and General Investment Management (LGIM) Managed Property Fund, which has won a number of awards for its focus on integrating sustainability across their real estate investments.

As more and more people start saving for the first time under government pension reforms, we believe it is time for there to be greater unity of purpose in the world of ethical products. More and more consumers want ethical and sustainable goods and it’s likely that demand for ethical pension funds will follow.

The challenge for all providers in the ethical space is to develop products that are simple, effective and do not compromise on value. For our part, we don’t think there should be a trade-off between quality and performance and exercising your ethical preference.

Paul Todd is the assistant director of investment at NEST.

Photo: Simon Cunningham via Flickr

Further reading:

Prince Charles: pensions industry ‘has a duty’ to be sustainable

Norwegian pension fund divests from ‘financially worthless’ fossil fuel firms

Croydon Council announces move to ethical pension funds

Which? says impartial advice ‘critical’ to protecting pensioners

Norwegian pension fund rejects OECD ethical guidelines

Environment

How to be More eco-Responsible in 2018

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Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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Energy

Top 5 Changes You can Make in Your Life to Reduce Your Carbon Footprint

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Saving money and reducing your carbon footprint? What isn’t to love? - Image from Shutterstock - https://www.shutterstock.com/g/thodonal88

In a world, where war rages and global warming threatens our very existence, the inhabitants of earth need to be extra vigilant in their efforts to go green. This includes reducing your carbon footprint on the earth and leading a more sustainable life.

Many homeowners feel perplexed by all of the options available to reduce their carbon footprint. They may even feel (falsely) that making their household more green will fail to make that much of a difference in the fight to save our planet.

Even a single home going green has a massive impact on the environment. We can win this battle on home at a time. If you’re interested in accepting the challenge of making your household a green home, read on below for a few of the top changes you can make in your life to reduce your carbon footprint. We all stand to benefit from making the earth safer for future generations – and your wallet won’t complain when you start to see the savings in annual energy costs.

Switch From Dirty Energy to Clean Solar

The ION Solar reviews tell it all–solar is the best way to go. Whether your goal is to slash your energy bills, or to reduce your carbon footprint, the sun is a fantastic source of renewable energy.

It’s important to get past the hype from solar installers. Instead, listen to the plethora of impartial customer reviews that mention everything from a $20 energy bill, to the incredible feeling of knowing that you are doing your part by going green and minimizing harmful emissions in to our atmosphere.

The average investment is $15,000 to $30,000 for installation and purchase of solar panels. Optional battery power packs can help provide consistent power during both night and day. And many government agencies provide federal, state or local grants to help offset upfront investments in clean energy.

Depending on which installed you choose, your household may qualify for low-interest or zero interest loans to cover the up-front cost of your installation. And the loan payments are usually less than your current monthly power bill.

It really is a win-win, as home buyers are looking for homes that feature this technology – meaning solar power installation improves the resale value of your property.

Home Modifications

And there are a number of additional home modifications that can help improve the energy efficiency of your home. A programmable thermostat can better manage energy consumption from home cooling and heating systems while you’re away from home. And weather stripping your doors can help keep cool air in during the summer, and warm air in during the winter.

Of course, energy conservation starts at home. And this includes setting a powerful example for your kids. Teach your children how to close windows, strategically keep doors open or closed based on airflow, and encourage them to leave the thermostat alone – opting for adding or removing layers of clothing instead.

Unplug Appliances and Shut Off Electronics

Unplugging your appliances when they aren’t in use, such as the toaster and the coffee maker, has more of an impact than you might think. Set your TVs and stereos on sleep timers, instead of letting them run around the clock. The cumulative impact of wasteful electronic device usage is horrible for our environment – putting unnecessary strain on our electrical grid.

Recycle

One of the simplest and easiest ways to reduce your carbon footprint is by recycling. You are already throwing this stuff away anyway, right? It doesn’t take much more effort to just put recyclables in a separate container to be recycled, now does it?

Oh, and did I mention that you can earn money for recycling? Yes! Many cities and towns have recycling centers that will purchase your clean plastic and glass bottles for reuse.

Minimize Your Water Usage

Water is one of the easiest things to forget about when it comes to reducing your carbon footprint. Preserve water by turning off the faucet while brushing your teeth. Shorten your shower by a few minutes and turn down the heat on that water heater. You’ll be surprised at how much lower your water bill and your energy bill will be.

Saving money and reducing your carbon footprint? What isn’t to love?

These are just a few of the top ways that you can reduce your carbon footprint and start living a greener lifestyle. And we aren’t factoring in all of the advantages that we’ll reap from public investments in a smarter energy grid.

From decreasing your water usage, to switching to solar for your home’s energy needs, you will feel good at the end of the day knowing you are doing your part to save the future of this planet for generations to come!

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