Bristol-based Aspirations Financial Planning has set up The Sustainable Pension Company (TSPC) to provide clients with access to ESG and sustainable investing options for their pension.
The telephone-based service lets people invest their retirement savings into sustainable funds that are in line with their values.
TSPC offers a 1% fee on pension transfers and contributions, which is capped at £5,000 ($6,817, €5,809) and can be paid from the pension.
The total annual fee is between 1.5% and 1.8%.
‘Horrified’
Roger Milbourn, TSPC’s investment committee chair, said: “Chances are you have a pension, whether that be a workplace or personal pension.
“So, few of us know where these pensions are being invested and I think many ESG-conscious investors would be surprised, and even horrified to know that they have been invested in industries that not only contribute directly to unsustainable practices, but also ones that are potentially harmful to the planet.
“During the market downturn, due to coronavirus in 2020, a lot of ESG and sustainable funds did much better than the traditional approach. As ESG and sustainable funds tend to have more growth stocks than value stocks, volatility is typically greater although the hope is that the longer-term returns reflect this extra risk.
“It’s widely believed that the governance part of the ESG approach should lead to better returns in the long run, given that by its very nature, you are investing into companies that are deemed to have better management and corporate structures than their counterparts.
“The area of sustainable investing and ESG investing is very wide and can encompass many different areas. The United Nations Sustainable Development Goals provide a useful framework within which fund managers can demonstrate the areas their investment portfolios focus on. Moving beyond the flow and assessment of information, it is also important to determine how investing in these firms can help to do good.
“One such way is through active engagement where the shareholders can influence the management of the company. A fund manager is uniquely placed to make their own impact upon the company given they can often have a sizeable stake in it.”
