Responsible Investor

DC pension saving: the next ethical consumer boom?

Defined contribution pension savings part of first UK National Ethical Investment Week.

The UK’s inaugural National Ethical Investment Week (NEIW) runs from 18th-24th May. Why is this of interest to pensions professionals? The simple answer is ‘defined contribution’.
Highlighting the green and ethical investment options available in many defined contribution funds could be an effective way to encourage greater support for the fund, raising awareness of those options and encouraging greater general engagement with pension provision. Where the employer is a corporate social responsibility leader, it could also create a virtuous circle between the pension fund and the values and practices of the business – highlighting the links between wealth creation and responsible business behaviour in a way that both reinforces employee commitment and motivation and interest in saving for retirement.
This may sound surprising to those who still see green and ethical investment as a niche issue – something of interest only to a sandal-wearing minority. Indeed even the doughty champions of long-term responsible

investment and extra-financial research may raise their eyebrows at the idea that green and ethical consumerism has an important role to play in influencing future pension demand.
But go into almost any supermarket near you and think again! Green is cool, ethical is aspirational and there is an emerging case that we will see a fundamental shift in consumer behaviour play out over the next few years – although with some interesting twists that could be discomforting to traditional green campaigners.
Look at the rise of Fairtrade in recent years. The British public now drinks over 8 million Fairtrade hot drinks every day, according to the Fairtrade Foundation. One in four bananas sold by UK supermarkets is now Fairtrade. There are over 3,000 products licenced to use the Fairtrade label, up from three in 1994 and only 350 as recently as 2004 . And, most importantly, nine out of ten people in the UK have heard of Fairtrade.
Contrast that with only a few years ago and see how ethical consumerism can engage the public.

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