Why ESG factors matter for your pension pot?
To help grow your pension over time, your money will typically be spread across a wide range of investments in countries and companies all around the world. And how these investments perform will affect the value of your pot.
One area that can affect performance is how well companies manage ESG factors.
This stands for environmental, social, and governance.
This includes everything from their waste disposal and energy use, to supply chains, to how they treat their people and local communities, to how they approach diversity and fair pay.
If they get these areas right, it can have a positive impact on their brand and share price. And on the world we live in too.
If companies don’t take these issues seriously, they could cause some harm to people and the planet which may lead to fines, damage to their reputations, falling demand and ultimately a falling share price which could in turn impact the value of your pot.
But it works both ways.
Companies who do take ESG seriously – or come up with solutions to ESG issues – may see their value grow over time, meaning your pension pot could potentially grow too.
That’s why investment managers may consider ESG factors when they decide where to invest your pension money, and they’ll use their influence as a shareholder to encourage companies to improve their standards.
It’s good news for you because it’s helping you to save for retirement and can also support the kind of future you’ll want to retire into.
As part of Phoenix Group, we’re on a journey to becoming net zero by 2050.
Find out how we’ll continue to support a better financial future for our customers, while considering our investment in carbon emitting sectors in our Net Zero Transition Plan.
