A NET ZERO

PENSIONS GUIDE
FOR SMEs
Make your Money Matter
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Is your company pension net zero?

To avoid the worst effects of climate change, we need to halve greenhouse gas emissions by 2030 and “Put your money
where you want
reach net zero by 2050 at the latest. Your company might be working hard to cut its carbon footprint
and become a net zero emissions business. But what is your company pension doing? It could be funding

the world to go.

green projects, building windfarms, and investing in carbon capture technology. But it could also be
investing in fossil fuels, unsustainable supply chains and the world’s worst polluters.

Double your impact with a net zero pension It is as simple

and as powerful
Make sure you know what your company pension money is doing. Ask for it to be net zero. Doing this will
make sure your pension does not undermine your values and your efforts to make your business net zero,

as that”
and it will also have a positive impact on the world you do business in. Plus, there is power in numbers.
SMEs make up 90% of businesses worldwide, and employ 2 billion people – that could be 2 billion
sustainable pensions, to help us on our journey to net zero.
Christiana Figueres,
Former Executive Secretary,
What’s inside: United Nations Framework
• Why net zero pensions are good for business Convention on Climate Change

• 3 steps to a net zero pension

• How can a pension be net zero?

For more information, visit the Make My Money Matter team at makemymoneymatter.co.uk.
We’re calling for the trillions of pounds invested in all our pensions to build a better world.

Why net zero pensions are good for SMEs
Good for your impact
Every step you take to reduce emissions in your business operations and
supply chain is vital. But you can double that impact by demanding a net zero
pension, too. As well as working on your own footprint, all the money you
and your employees pay into your staff pension will invest in projects that
accelerate our journey to a net zero world.
Good for business
Taking climate action creates a competitive advantage for companies.
Customers, shareholders, investors and employees are more likely to choose
a business that has adopted ambitious climate-related targets. But this
advantage can be undermined if your pension is investing in the world’s
largest emitters. Moving to a net zero pension can enhance your reputation
and help to protect it.
Good for your employees
Rising global temperatures pose a huge financial risk to investments, which
pension providers already legally have to consider in many jurisdictions.
Investing pension savings sustainably, in line with net zero emissions, helps
manage that risk. Plus, sustainable investing is increasingly providing better
returns than traditional investing. So, you will be helping your employees get
more money for the future.
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Good for attracting and retaining employees
More and more employees look to work with companies with strong values,
where sustainability is front and centre. A net zero pension becomes a
more attractive offer to recruit and retain your staff. You will also help your
employees engage with their savings, because people are more likely to
take an interest if they know their money is doing good. Pensions are often
an expensive benefit for an employer to provide – making it net zero means
your employees are more likely to value that benefit. And, the more your
employees know about, and value, their pension now, the better decisions
they will make about their money later.
Good for the world
Pensions add up to around US$47 trillion globally – invested in the world’s
22 largest markets. Every net zero pension takes us closer to a low-carbon
economy. Each pension channels retirement savings into building a world
that is fit to retire into.
Over 71% of citizens around
the world consider climate change
as serious a crisis as Covid-19.
(Ipsos Mori, 2020)

3 steps to a net zero pension
1. Find out how your pension works
Although there are many different kinds of pensions across the
world, most can be put into one of two categories. Find out whether
your pension is:
• a government-backed scheme – where there may or may not be
direct investment in the private sector
• a privately invested scheme – where fund managers or insurance
companies invest your pension money on your behalf including in
businesses listed in the stock exchange,
2. Influence it
a. I f you have a government-backed scheme, contact the government
body that looks after your pension. Ask them:
• Is the money you and your employees pay into your pension
scheme invested?
• How is that money invested – in what projects, in what infrastructure,
in what companies?
• Do they have any plans to change how they invest in the future,
to align with net zero emissions by 2050?
If they do not, encourage them to make a change. There is more
information about how they can do that on the next page. If they have
no plans to change, you can speak to the regulator. Ask the regulator
when pension legislation will align your investments with your country’s
commitment to, or plans for, net zero. Collective action with other SMEs
will also have more impact.
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b. If you have a privately invested scheme, speak to the trustees,
provider, or insurance company that runs your pension. Ask them:
• W here is your and your employees’ money invested – in what projects,
in what infrastructure, in what companies?
• How do these investments help or hinder the work your company is
doing to reduce emissions?
• Can the pension scheme be aligned to net zero or is there an alternative
scheme which would align with net zero?
If you are not happy with where your pension is invested, you can: change
the scheme or fund(s) you invest in, encourage your trustees/provider/
insurance company to do more, or even move to a different pension provider.
3. Share the good news
Get the rest of your company and staff excited about their net zero
pension. The more they know, the more likely they are to take an interest,
to make good decisions about their money, to save more, to appreciate
your company more, and to stay for longer. Tell your team:
• W hat their money is doing. Be specific – ‘building a windfarm’ is more
compelling than ‘investing in infrastructure’.
• That they have significantly cut their carbon footprint. Both in the
business and also in the pension.
• This is good for their money. Investing sustainably can deliver even
better returns than traditional investing.
• It all adds up. With US$47 trillion worth of pensions invested globally,
our pensions could change the world.
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How can a pension be net zero?

There are 3 ways pension money can be invested to achieve
net zero by 2050
Whoever looks after your pension money will invest it in different things –
whether that is government projects, infrastructure, or stocks and shares.
There are broadly three things they can do to invest in a way that halves
emissions by 2030, and reaches net zero before 2050.
1. Invest in projects, companies and infrastructure that
reduce emissions
There are investment funds that are specifically made up of companies
and projects that have a low carbon footprint. There are funds that invest
more of your money in green companies and less in high emissions
companies – or even cut them out completely. There are opportunities to
invest specifically in green projects, for instance windfarms or solar farms,
green infrastructure, or in government backed green bonds. And there are
opportunities to invest in the technology that will help tackle the climate crisis.
3. Divest from projects, companies or infrastructure that
have high emissions
The people who look after your pension money can simply stop investing in
high polluters, or in investments that carry supply chains with high emissions.
They can take the money out and invest it somewhere else. A pension that
is divested from all fossil fuels, for instance, will have much lower emissions
than a pension that still invests in fossil fuels.
Over the last 10 years, sustainable
funds have consistently outperformed
traditional investments.
(Morningstar, 2020)

2. Engage with the organisations they invest in on behalf of

savers, to encourage them to reduce emissions Join us at Make My Money Matter to make your pension match
Many investment managers believe the best way to improve the behaviour your staff pension with your business values and mission and
of the organisations they invest in is to engage with them. The managers help build a Net Zero world for us all.
use their influence as a major investor and shareholder to encourage projects
and companies to change their direction, policies or even personnel. www.makemymoneymatter.co.uk
For instance, an investment manager might use a shareholder vote at a
company meeting to persuade the CEO of the company to commit to net zero.
The investment manager can even threaten that, if the company does not
change its behaviour, they will divest – and take out all of the money it invests With thanks to our partners, for helping us create this guide.
in the company. www.quietroom.co.uk