Ecologist guide to green investments
Greening my office: choosing an ethical pension
13th January, 2011
Sylvia takes a step towards financial security with her premier pension payment. But can she keep a clean conscience at the same time?
This week I sailed through a passage of rights, starting my lifelong pension. Of course, this statement reveals more about my lack of financial sense than it does about the environment. But still, this fiscal maturation has uncovered a considerable amount about the ethical status of pensions, as well as my organisation's lack of understanding herein.
A pension fund is a simple thing. Money is extracted from your salary, siphoned off into a pot somewhere and invested in stocks and shares. Then, when you're of eligible age, you can collect the swagger (which has hopefully multiplied in size) and use it to support yourself through retirement - along with a strong set of artificial limbs.
And the pension fund which currently administers my pension provides a great deal of comfort to its clients.
'We have over 60 years experience of advising on pensions' reads well on their website. 'Our main objective is to deliver quality and effective solutions that meet our patrons' needs.'
Rest assured it is encouraging to know that my financial future is in such capable hands.
But I wanted a green pension. So I had to put my pension provider to the test. Could they meet the needs of both me and the wider me: my environment?
Investing my money
When I asked about where my money was being invested, I was confronted by a wall of misinformation and confusion.
'I'm not sure who administers the pensions to be honest, let alone where the money is invested' said Jill the office PA.
Now, although this is in fact a step up compared to the inane obduracy which usually faces me, I was still slightly disheartened, not least because I had previously made a personal pledge to never invest into an organisation I did not wholly endorse.
And it seems I am not alone. Over the past 20 years a growing proportion of the UK population has expressed concerns about where their money is invested, with ethical pension funds creeping further into the mainstream since their inception in 1984.
A number of investment companies now offer a range of ethical fund options that adhere to a specific range of ethical and socially responsible criteria; including environmental policy, human rights and political allegiance.
What is the deal?
These so-called ethical funds hold a higher percentage of shares in smaller companies than their non-ethical equivalents. However, undersized shares can sometimes be more volatile than those of larger companies and as a result, ethical funds are perceived as being a riskier investment - and thus they are less popular.
But as with all funds, there is always a risk in the short-term. So as a responsible investor, one should always be looking to invest for the medium to long-term, thus levelling out such pecuniary turbulence.
Finding my fund
All week I battled against the wall of bureaucracy that lay between me and a sound pension plan, trying to locate where my fund was being invested. But I was unable to find a way through. No response to emails, and little help on the phone.
'I can find out where your money is invested next week I think, but I'm not sure you can change it,' said the faint female voice on the end of the line.
She went on: 'Have you spoken to your employer?'
It would appear that my pension fund administrators have absolutely no control over where my pension pot is invested - so much for meeting the needs of the client.
I brought this up with John, the company boss.
'I've never really considered where my pension payments go, they seem invisible' he said. 'But you should be able to invest your pension wherever you want, right?'
John promised that he would 'look into it.'
But with a clueless pension fund administrator and an equally oblivious company policy manager, I won't hold my breath about anything changing soon. If I did, I don't think I'd last to see out my pension at all.
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