Over a third (34 per cent) of AJ Bell Youinvest customers would increase their pension contributions if they thought it would be good for the environment, a survey from AJ Bell has found.

Furthermore, almost half of respondents stated that they plan to invest more of their pension in companies with a positive environmental impact in 2021

Considering the findings, the firm has emphasised the important of ensuring investments are readily available to members, and suggested that pressures may grow for automatic enrolment default funds to be invested responsibly.

The research also revealed that a further 44 per cent believe that their pension savings can be used to protect the environment, with 32 per cent highlighting the environment as the most important ESG consideration.

Corporate governance meanwhile, was ranked as the most important consideration by 11 per cent, and societal impact by 6 per cent.

Despite this support for responsible investing, a second survey by the firm has also found that one-in-three people believe that investing in a socially responsible way will mean accepting lower investment returns.

This belief was found to more prominent amongst men, with 41 per cent holding this view, compared to 23 per cent of women.

However, just under a third (31 per cent) of respondents stated that they would accept a 1 to 5 per cent reduction in investment returns, whilst a further 17 per cent would accept a reduction between 5 per cent and 10 per cent.

AJ Bell also emphasised that the belief that you have to forego returns in order to invest in a responsible way is a myth.

The firm cited its own recent analysis, which showed that the average UK All Companies Ethical Fund has outperformed the FTSE All Share by 40 per cent over the last 10 years, and has also outperformed the average non-ethical fund by 23 per cent.

Commenting on the findings, AJ Bell senior analyst, Tom Selby, stated: “While investing in a pension is, of course, primarily about building a pot of money to fund your lifestyle in retirement, it is clear there is significant appetite to invest this money in a socially responsible way.

“Given the UK’s total pension wealth amounts to over £6trn, it is possible this shift in behaviour will play a fundamental role in tackling the climate crisis.

“If hundreds of billions of pounds of money starts to flow to companies which take their environmental responsibilities seriously, more firms will inevitably place this at the top of their corporate agendas.

“The cold hand of capitalism – and in particular widespread industrialisation throughout the 20th Century - has undoubtedly played an enormous role in damaging our environment and warming our planet.

“But through our investments, it could also hold the key to dealing with some of the problems it has caused. It is entirely possible that pensions will, eventually, help save the world.”

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