Your finances can be a powerful tool in addressing the climate crisis. The recent United Nations climate conference in Glasgow, COP26, highlighted the urgent need for a critical dialogue on how to utilize financial resources in the fight against ecological challenges.
During the World Leaders Summit at COP26, attendees were invited to a screening of WWF’s documentary, “Our Planet: Too Big To Fail.” This film examined the consequences of inaction and the implications of conventional investment strategies while showcasing how the financial sector can drive sustainable practices. A panel featuring representatives from organizations such as Make My Money Matter, Triodos, Aviva, and WWF discussed how banks, savings accounts, and retirement funds, enhanced by fintech innovations, can contribute to environmental preservation.
### The Pension Dilemma
Can you confidently say who oversees your pension investments? Are you aware of the leading companies your pension supports and their environmental impact?
During a session titled “How Your Wallet Could Change the World,” David Hayman, Campaign Director of Make My Money Matter, revealed a staggering statistic: having a green pension is 21 times more effective at reducing carbon footprints than adopting practices like cutting out flying or switching to a vegetarian diet. This is largely due to the vast sums—approximately £2.6 trillion in the UK and $50 trillion globally—still allocated to fossil fuels, tobacco, and other environmentally detrimental industries.
Hayman noted, “Our latest report indicates that pensions are responsible for 330 million tonnes of carbon emissions annually, surpassing the UK’s total CO2 output.” If the pension industry were a nation, it would rank among the top 20 global emitters.
Simon Mundy, the Financial Times’ Moral Money editor who moderated the discussion, emphasized that there are numerous avenues to address these issues, especially when responsible pension providers collaborate with fintech solutions.
### Innovations in Sustainable Pensions
Scottish Widows, a leader in life insurance and pensions, is making notable strides in this area. In 2020, the company divested £440 million from holdings that did not meet Environmental, Social, and Governance (ESG) standards. Their latest initiative, introduced recently, features a two-way fintech dashboard that allows customers to actively monitor and manage their pension investments.
In this context, PensionBee stands out as an online pension provider committed to reducing investments in environmentally harmful enterprises. They currently invest in over 3,000 companies globally, all assessed against a strict set of ESG criteria. CEO Romi Savova remarked, “PensionBee prioritizes transparency and upholds high standards of corporate governance.”
Their recently launched ‘Fossil Fuel Free’ plan is a pioneering effort in the UK, aiming to exclude companies with ties to fossil fuels, tobacco, and other unethical practices.
### Transforming Consumer Choices
SwitchIt, a fintech tool supported by Climate 2025, expands the dialogue beyond pensions. It enables consumers to evaluate whether their banks and energy providers contribute to environmental degradation.
“Since 2016, 35 banks have invested $2.7 trillion in fossil fuels,” the firm reports, highlighting the scale of financial involvement in destructive industries. The SwitchIt platform ranks energy providers based on their renewable energy use, employing data to categorize them from “terrible” to “great.” It highlights companies that generate their own renewable energy, including Ecotricity and Octopus Energy.
For banking choices, recommendations come from reputable sources such as the Rainforest Action Network and the Sierra Club, providing users with the option to explore and switch to more sustainable options if they’re dissatisfied with their current choices.
### Engaging for Change
Discussions at COP26’s Finance Day underscored that the existing capitalist systems have largely failed to protect our planet. A shift toward stakeholder capitalism, where the interests of all affected parties are considered, is essential for meaningful change.
However, this transformation is a collective effort that hinges on consumer demand for accountability and transparency from financial institutions. Regulatory changes, as Mundy noted, are unlikely to occur without strong public pressure.
It is crucial for consumers to actively engage with their financial decisions and advocate for sustainable practices. By voting with our wallets, we can help steer the financial landscape toward a more sustainable future.