More than half of UK pension fund members (61 per cent) would be comfortable for a proportion of their default workplace pension to be allocated into environmental investments, according to Investec Asset Management.

Its inaugural Planetary Pulse survey found that this figure rose to 72 per cent for the younger generation of 18-34 year olds.

People’s investments were a “less matured trend” compared to their intentions though, with only just over three in ten (31 per cent) respondents already having some of their fund allocated with environmentally focused funds or companies.

However, 59 per cent of this subset did plan to increase their allocation within the next three years.

This difference between intention and action was widely attributed to the focus on performance and yield of a pension, with 64 per cent of respondents considering this the “overriding concern” when making investment choices.

When asked if they would likely invest in environmentally-focused funds, provided it was possible to make competitive returns from them, 82 per cent answered yes.

The survey also found that whilst focus on performance was still key for UK savers, investing for good and for financial gain were no longer considered mutually exclusive, with 83 per cent believing it is possible to make competitive returns.

However, while the survey found a willingness for ethical investing, there was a broader and “concerning general lack of knowledge about their workplace pension pot”.

Less than half of respondents (42 per cent) claimed to have good knowledge of how their money is invested, and 56 per cent admitting they had little to no involvement in their pension investment decisions at all.

Investec Asset Management co-CEO, John Green, commented: “It is time to act on climate change and it is time to act on pension allocations. Our survey shows the investment industry must do a much better job of explaining the growth potential of the sectors and companies that are helping the world tackle climate crisis, as well as the risks of failing to adapt portfolios to address climate change.”

The survey stipulated that British adults are likely to hold the investment industry accountable, rather than the individual, with 56 per cent believing that asset managers and pension fund managers have and “obligation” to invest in ethical funds, while only 11 per cent disagreed with this.

On the other hand, the results also suggested that industry action could prompt further environmental investment, as 16 per cent of respondents would be prompted by clear industry guidelines outlining the percentage of an investment portfolio which should be invested environmentally; 15 per cent would value consistent and continuous industry measurement to enable them to select the most appropriate environmental products; and a further 16 per cent would be motivated by guidance from their financial adviser.

Green added: “We have witnessed people making substantial changes in their day to day behaviours for the good of the planet. It also appears that wider support and guidance from the investment industry and greater evidence of the potential financial returns on offer could be just the catalysts needed to prompt people into investing their pensions in a more sustainable manner.

“It is very encouraging that our Planetary Pulse survey has identified a real enthusiasm from UK pension fund members to invest in an environmentally focused manner.

"Collectively we all have a part to play in making positive change; pension funds have a mandate from their members to be more active and the investment industry as a whole has a duty to be more responsive, thus enabling people to align their portfolios for a world requiring a dramatic reduction in carbon emissions.

“The recent introduction of the Department for Work and Pensions’ guidelines obligating UK pension schemes to disclose their climate change risk amongst other ESG factors, will support a collective effort to make strides to invest for the good of the planet.”

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