• UK employees support responsible pensions, but many are clueless about whether their workplace pension is invested responsibly.
• When choosing a job, young employees want to work with an employer who upholds social values, including diversity and inclusion.

There is a growing demand for responsible pensions among UK employees, says a new study by the financial services firm Scottish Widows.

According to the survey, 72% of UK employees expect their employer to include environmental, social, and governance (ESG) factors in their pension. But, around half (47%) are unaware of whether their current workplace pension is responsibly invested.

The survey, which studied more than 6000 employees, including employers, employees, and financial advisers, highlights the growing concerns of employees with respect to global issues. Among them, the cost-of-living crisis tops the list, with 63% expressing worry, followed by climate change (44%), plastic waste (37%), and water pollution (33%), respectively.

Young workers prioritise diversity and inclusion and are particularly concerned about social issues. 70% choose a job based on how employers consider social responsibility, and 64% want these values reflected in their pension investments.

READ MORE: What is the Principles for Responsible Investment (PRI)?

Although there is demand for responsible pensions, barriers to adoption remain. 61% of respondents said they were unsure how to switch to a responsible pension option, with many apprehensive about potential costs and returns. 25% said they lack information to better understand responsible and ESG investments.

Eva Cairns, Head of Responsible Investment, Scottish Widows, said: “Employees are increasingly seeking to make sure their investments – including pensions – deliver financial return while considering the impact on people and planet, and there is clear demand for more responsibly invested options.

"We know pension savers are concerned about financial security and believe that considering risks and opportunities related to ESG can help build more resilient investment portfolios – but it’s also about contributing to a more sustainable future, tackling some of the societal issues people care about.

“There’s still a big knowledge gap to tackle, and employers should not only offer responsible pensions, but also do more to empower employees with the information they need to make more informed decisions.

“We’re committed to helping bridge this knowledge gap and ensuring that every pension saver can invest with confidence in a way that reflects their priorities, whilst also delivering the best possible return on their investments to ensure they are financially set up for their retirement.”

READ MORE: Is ESG Over? Exploring the Future of Sustainable Investing

To this end, Scottish Widows has joined forces with asset manager Robeco to help deal with this concern and integrate responsible investing into UK pension plans. The partnership aims to reduce the knowledge gap and educate employers about responsible investments and how they can smoothly transition to them.

To learn more about the study, click here for details.

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Source: Scottish Widows