Only a quarter (23%) of employees are aware of environmental, social and governance (ESG) options when it comes to their workplace pension, according to research from employee benefits, wellness and financial education provider Secondsight.
In the report, Workplace pensions and ESG, 60% admitted they did not know what ESG investing was; however, after being given an explanation, 42% said they would be happy to be auto-enrolled into an ESG fund.
Two-thirds (67%) of 20 to 30-year-olds and 73% of 31 to 40-year-olds said they would be willing to pay more to be in an ESG-focused default fund, compared with 36% of 51 to 60-year-olds and 29% of those aged 61 and above.
While only 25% had made any investments with ESG factors in mind, more than two-thirds (68%) said they would be willing to consider investing sustainably.
Almost two-thirds (63%) have changed their minds over the past three years about the importance of the environment. Half (51%) felt strongly about the impact that climate change could have on their savings and investments, and 89% were concerned about the impact corporate practices and some large businesses were having on the environment.
Matthew Mitten, partner at Secondsight, said: “Our research highlights that younger people are more interested in sustainability than the older generation, and would support investing sustainably and having an ESG fund as their default pension fund option. Making sure that employees have all the information they need to make decisions about their pension is vital.
“There is a clear disconnect between people’s opinions on sustainability and their awareness of what financial decisions are available to them that can put that into practice. Employers can help raise awareness of ESG in pensions in several ways, such as engaging with their pension provider to find out what actions they are taking around ESG and speaking with employees directly about their thoughts on sustainable investing.”