Research

72% of pension savers consider ESG factors important when investing

The introduction of Sustainable Finance Disclosure Regulation (SFDR), which came into effect on 10 March 2021, imposes mandatory environment, social and governance (ESG) disclosure obligations for fund managers and will be a catalyst for financial advisers to have conversations with their customers around sustainable investing. 

Aviva Life & Pensions Ireland DAC (Aviva), one of Ireland’s leading insurers, recently conducted research to gain insights into consumers’ views around pensions investing and to explore how important ESG considerations really are to them.

Of the 1,200 people surveyed, almost 50% have or contribute to a pension with over half (55%) understanding the type of funds that their pension is invested in. Two-thirds (67%) of consumers surveyed believe that it is important to consider ESG factors before investing and this figure rises to almost three in four (72%) for those respondents with a pension. 

Interestingly, females are more likely to consider ESG investing at 70.4% than males at 63.9% and its importance is broadly similar across all age cohorts. 

Whilst 51% of those with pensions would like to increase their investment in companies that are tackling climate change, some 70% of those respondents acknowledged the need to better understand the benefits of responsible investing, highlighting the fact that there is an onus on the industry participants to educate consumers in this space.

More than half (53%) of those surveyed believe that it is important that a company has a positive record of social responsibility and good corporate governance, rising to 60% of those with a pension.

Those without a pension rated the importance of a positive impact on Irish social outcomes (46%) higher than a positive impact on the environment (44%), while pension holders rated the positive impact on the environment at 51%, higher than a positive impact on Irish social outcomes at 47%.

Looking to the age cohorts, the above factors are more important to those aged 55+ (63.7%) and less so for the 18-24-year olds (34.5%) - many of whom are unlikely to have a pension.

The survey also explored the factors that are important to consumers when considering investing sustainably.  Most respondents (75%) indicated that they would need good financial advice before making their investment decision, rising to 78% for those with a pension. 

Two thirds (67%) said they would only invest their pension sustainably if the returns were the same or better, (71% of pension holders) and 64% said they would only consider doing so if they are not paying higher fees and charges (68% for pension holders. 

Some 51% of those pension holders surveyed said they would like to increase their pension savings into companies helping to combat climate change and only 20% of all respondents (17% of those with a pension) said that investing sustainably is more important than investment returns.

Almost one in three respondents (31%) would completely switch away from a company if they had a perceived negative environmental impact (28% of those with a pension), 26% would invest less (30% of pension holders), with only 15% saying they would remain invested (21% of pension holders. 

When asked if they would stay invested in an oil company that had made a commitment to move to more climate friendly practices, 45% said they would remain invested (53% of pension holders), 11% said they would invest less (similar for those with and without a pension), whilst 36% would seek advice before making their decision (29% of pension holders). 

There was a stronger reaction from respondents when asked what they would do if their pension was invested in companies that attracted criticism for their governance and senior management pay with only 13% saying they would remain invested (17% of pension holders). The majority (43%) said they would seek advice (40% of pension holders) and 25% said they would completely switch away from investing in the company (22% of pension holders). 

Companies that attracted criticism for how they treat and pay employees received a similar strong response with only 9% (both) saying they would remain invested, 39% would seek advice (38% of pension holders) and 34% would completely switch away from the company (33% of pension holders). 

Commenting on the research findings, Richard Jones, Aviva Life & Pensions said:  “Whilst the introduction of legislation in this market will serve as a catalyst for financial brokers to engage with sustainable investing, it is evident from our research findings that demand for information and advice in this space will also be driven by consumers. As ESG investing matures, regulation will strengthen and the selection of funds available will expand.

"Asking your pension provider where your money is invested or how the fund manager is representing your voice on key ESG issues is perhaps the most powerful thing you can do."

"We have designated our flagship Multi Asset Funds managed by Aviva Investors as Article 8 under SFDR, meaning that the funds now have a binding commitment to incorporate ESG considerations into the investment decision process. In addition, we are currently working with other managers to support their move towards more sustainable investing.

“We often think about the small changes we can make to save the planet and don’t always appreciate the actions we could take to propel more impactful change.  Asking your pension provider where your money is invested or how the fund manager is representing your voice on key ESG issues is perhaps the most powerful thing you can do to contribute to the single largest threat facing humanity today.

“Data from fund rating agency Morningstar shows that the assets in sustainable funds in Europe surged by 52% to hit €1.1 trillion in December 2020.  Morningstar noted in that report that an ESG approach into investment methodology has the potential to improve investment returns, with 52 of the 69 ESG screened indexes outperforming their broad market equivalents, while 88% outperformed for the five years to the end of 2020.

“Insurers have a key role to play both in educating consumers and financial brokers to better understand the significant impact that investing sustainably can have on our climate.  In turn, financial brokers will play a critical role in supporting their customers through the investment process and helping them find the most appropriate product that meets their investment criteria within the ESG sector.”

-ENDS-

Further information

The research was carried out by iReach Insights Limited and was part of a nationwide study conducted as part of the iReach Consumer Decisions Omnibus Survey with 1,200 respondents. The fieldwork was undertaken at the end of April 2021.

Aviva plans to become a Net Zero carbon emissions company by 2040. This is the most demanding target of any major insurance company in the world today. The undertaking, which will inform every aspect of its operations and investment decisions, is part of its strategy to be a leading insurer in Ireland, the UK and Canada contributing to a more sustainable economy and society.

Aviva Investors, which is part of the Aviva Group and one of our fund managers has been rated one of the best investors in the world for using its influence with companies to drive action on climate change, for example, in the ShareAction’s Voting Matters Report, Aviva Investors was one of only five investment managers globally to receive an A rating.  The fund manager announced its new ‘climate engagement escalation programme’ in February 2021, which targets the 30 largest carbon emitting companies in the world who together account for about 30% of the worlds carbon emissions. It is making specific asks of these companies; to set a Net Zero target by 2050, to develop a strategy for achieving this and to ensure management incentives are aligned to this goal. Timelines for achieving this have been set out of between 12 and 36 months for companies to begin to deliver on these goals and, if there is no serious engagement from these companies to meet the climate challenge, Aviva will put them on its stop list and divest any assets it holds. While divestment is not Aviva’s first choice for companies who do not move towards a low carbon economy or that are not taking on board other ESG factors, the option of divesting from these companies will always be considered.

Media Enquiries

Anne Mathews
Communications & PR Manager
anne.mathews@aviva.com / 087 246 0358

Notes to editors:

  • For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/
  • We exist to be with people when it really matters, throughout their lives. We have been taking care of people for 325 years, in line with our purpose of being ‘with you today, for a better tomorrow’. In 2020, we paid £30.6 billion in claims and benefits to our customers. 
  • Aviva is invested in our people, our customers, our communities and our planet. In 2021, we announced our plan to become a Net Zero carbon emissions company by 2040, the first major insurance company in the world to do so. This plan means Net Zero carbon emissions from our investments by 2040; setting out a clear pathway to get there with a cut of 25% in the carbon intensity of our investments by 2025 and of 60% by 2030; and Net Zero carbon emissions from our own operations and supply chain by 2030. Aviva has been leading this agenda for decades: Aviva was the first international insurer to go operationally carbon neutral in 2006 and we are champions of renewable energy and energy storage at our offices, allowing us to achieve our 2030 carbon reduction target (70% reduction on 2010 levels) 10 years early. Find out more about our climate goals at www.aviva.com/climate-goals and our sustainability ambition at www.aviva.com/sustainability.
  • Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid carers leave and equal parental leave. Find out more at https://www.aviva.com/about-us/our-people/
  • We are focused on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience. We also have strategic investments in Singapore, China and India.
  • At 30 June 2021, total Group assets under management at Aviva Group are £522 billion and our Solvency II shareholder capital surplus is £12 billion. Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index.
  • For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us 
  • The Aviva newsroom at www.aviva.com/newsroom includes links to our spokespeople images, podcasts, research reports and our news release archive. Sign up to get the latest news from Aviva by email. 
  • You can follow us on:
  • Twitter: www.twitter.com/avivaplc/
  • LinkedIn: www.linkedin.com/company/aviva-plc
  • Instagram: www.instagram.com/avivaplc
  • For the latest corporate films from around our business, subscribe to our YouTube channel: www.youtube.com/user/aviva

      More from our Newsroom