Why ESG knowledge is pensions power for DC members

In just three years we’ve had the visceral shock of the pandemic, fears that warfare overseas could undermine domestic stability and, of course, the cost-of-living crisis. Expecting UK workers to prioritise their pensions could be a tough ask right now.

Yet our latest research[1] suggests that when people understand that their pensions aren’t only a personal retirement savings tool but can help influence some of the most critical factors affecting their lives, they are generally keen to engage.

In this year’s investigation into the ESG (environmental, social and governance) views of our DC (defined contribution) pension members – the fourth in a series of similar exposés – we found that support for ESG investments in pensions depends largely on how well the pensions industry – including providers like us at Legal & General Investment Management (LGIM) – communicate to members how pension power works.

What do they know?

Most of the 3,634 UK DC pension members in the accumulation phase that we surveyed know that their pension savings are invested. They also know that this means they own little bits of companies and that, collectively, pension funds own large parts of businesses (68% said they were either very or vaguely aware of this).

And when they know that their pension money can be used to encourage companies to behave better in terms of their ESG practices, 84% of our DC members say they would have wanted to be more involved in their pensions if they’d known it was being used to drive positive ESG changes.

Click here to read the full article on our DC ESG investing research

[1] Legal & General Investment Management (LGIM) survey in June 2023 of the views of 4,678 defined contribution workplace pension savers on environment, social and governance investing. Respondents were split across generations and genders and across the UK and Ireland.