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Sustainability in pensions: is it a priority for your members?

Article by Nikita Rana - 23/06/2022

Over the past few years, the word ‘sustainability’ has weaved its way into many social conversations. People are looking for more ways to reduce their carbon footprint and contribute real change in the world – but is it really a priority when it comes to retirement saving? 

But first, what do we mean by ‘sustainability in pensions’?

For pension schemes, it can mean managing and maintaining the investment risks that come with climate change. For members, it’s about knowing the pension provider considers and/or offers responsible investments options – those which take environmental, social and governance factors into account.

We’ve seen many organisations putting sustainability close to the top of the agenda, with the hopes of winning the hearts and minds of their pension scheme members and improving engagement – all whilst doing good for the world we live in. From our own ‘unproven assumptions’ research, we know members generally care about where their money is invested, with 84% of people showing interest in where their savings go. But do members see sustainability as a priority when it comes to their pension and where their savings are invested? 

According to research, maybe not so much. 

A survey by Aviva* found that 72% of the people they spoke to believe it’s important to consider ESG factors before investing. Yet, through surveys we’ve done with our clients, we’ve repeatedly seen that investing in funds that offer security from risk and the best potential for growth are the top priorities for members. Ethical investing tends to appear third on the list, or even further down. Suggesting that while it’s important, it’s not the priority for members. Especially if extra costs for these funds fall to the member. 

But does this mean you stop with the sustainable agenda messaging? 

Absolutely not. 

Regardless of where sustainability sits on the priority list for members, the way pension providers present themselves is crucial. Members value whether their pension arrangement and its trustees are actively working towards doing ‘good’ alongside general pension management, and according to PWC*, having a sustainability agenda shapes both efficiency and reputation. So, sharing your scheme’s view on sustainability is an important factor in developing engagement, and building trust in the scheme and pensions more broadly. 

The key words here are building trust – creating empathetic connections and developing a sense of loyalty and trust with members is what maintains engagement over time. But for that, sustainability alone isn’t enough, the pension scheme’s core messaging needs to be working.  

Nest* found in 2021 that whilst communications around responsible investments were effective in engaging, they were less effective compared to first time engagement communications. So, something simple like a standard account activation email with no mention of investment or responsible investing, produced higher open and click through rates and had the strongest impact on member registrations, compared to emails talking about responsible investments.

Again, showing that communicating about sustainability should be done with care – once a relationship has been formed with members.

So, how do you engage members with sustainability in the most effective way?

Be genuine and transparent with your members

A big part of pensions communication is building confidence with your members, and so if you’re talking about sustainability, it needs to be genuine – it shouldn’t just be a tick box exercise, something you include because it’s a hot topic. Real change happens with real conversations. This can be done through consistent messaging and a tone of voice that’s genuine and easy to understand.

And if it’s not on the top of the priority list, then that’s okay to communicate too. But all information should be available for members so there’s an understanding of the company’s stance – transparency is key in constructing meaningful connections.

Do your research and know who your members are

Listen to your members – tailor communications according to what your members need, aligning with their ethics and values. Depending on how much they’re driven by sustainability can dictate how much you talk about it in your communications, and how much you’re engaging them. So, if your audience is a little disengaged, it might be worth focussing on those straightforward messages, or personalised communications, to get that initial engagement before talking about sustainability. 

Make it easy to understand with creativity 
Pensions and investments can be confusing. Throw in another (perhaps unfamiliar) concept, and you could be at risk of confusing your members even more. Everyone retains information differently. Use plain, simple language to explain it, and put the member at the forefront of the message by using ‘you’ and ‘your’ to make the reader feel more involved. You can also look to other ways of explaining information – visuals can go a long way. For example, if you have a statistic that’s a little hard to grasp, visually portraying that statistic using an infographic style or graph can strengthen the message. 

So, while sustainability might not be the top priority for members, it can help to build trusting connections with them.

Working towards getting your core values and message right whilst strategically communicating your sustainability agenda, will strengthen the relationship with your members. 

*Consumer insight to how important ESG considerations really are. AVIVA 
*The Sustainability Agenda: Industry Perspectives. PWC

*Responsible investment as a motivator of pension engagement. NEST 2021