UK green pensions campaign branded “misleading” and “unethical”

Make My Money Matter campaign says sustainable pensions are 21x more powerful in tackling climate change than a range of lifestyle changes combined

A high-profile campaign encouraging pension savers to move their money into sustainable strategies has divided experts, with critics calling its claims “misleading” and “unethical”. 

Make My Money Matter is a UK-based initiative co-founded by film director and writer Richard Curtis, and its latest campaign – underpinned by research from insurance giant Aviva and data house Route2 – says that “making your pensions go green is the most effective action individuals can take to save our planet”. 

It argues that switching a pension to a sustainable option is 21x more powerful in addressing climate change than becoming vegan, avoiding flying and switching energy provider combined.

However, some market observers have called out the campaign for suggesting that pension allocation has a direct bearing on real-world emissions. 

Jakob Thomä, Director at think tank 2 Degrees Investing Initiative, described the claims as “unfortunately misleading, even if I think mobilising pension fund beneficiaries is a great initiative”. 

“Conflating the emissions you reduce directly by changing your consumption choices with the emissions you reduce ‘virtually’ by changing your investment allocation is comparing apples with oranges and unfortunately will mislead individuals,” he explains.

Germany’s Deka Bank was threatened with legal action by a consumer watchdog earlier this year for its use of an “impact calculator” that claimed a €10,000 investment in one of its green funds could lead to a CO2 reduction of 575kg – equivalent to driving 3,597km in a diesel car. It removed the calculator. 

In 2019, a number of senior finance academics, activists and portfolio managers criticised asset manager Nordea’s claims that some of its retail funds offered customers 27x more carbon savings than if they cut down on meat and water consumption, reduced international flights and used public transport.

“If we don't want banks to provide misleading information, we can't as civil society be guilty of the same sin,” said Thomä. 

Route2’s CEO, Daniel Lopez Dias, said the methodology was different from that employed by Nordea, addin that it compares “apples with apples” by creating a “carbon profile”.  

‘I think the methodologies and the message are absolutely wrong. You cannot separate what is going on in the markets and what is going on in the real economy” – Steinar Juel,  senior economist at Norwegian think-tank Civita and former Chief Economist at Nordea

The research quantified the carbon footprint of UK households based on the country’s consumption habits, including imports and exports. 

“The daily consumption of bread and the investment in a pension fund is in exactly the same dataset on the [UK Office for National Statistics’] annual household expenditure survey, which our data is based on,” he said. “We arrived at roughly seven tonnes of CO2 per person per year, and then we used a bigger model to understand the carbon embodied within all of all the constituents of a default pension fund. Then you see what happens if you shift from a default fund to a more climate sensitive fund, and compare the impact if a UK household became vegan to the impact of shifting a pension fund from default to a climate sensitive fund.”

Ulf Erlandsson, CEO of Sweden’s Anthropocene Fixed Income Institute said the campaign sends the wrong incentive to the public on reducing carbon emissions. 

“The basic issue is when Nordea had a big campaign around this, there were subsequent articles claiming that you can continue to drive your petrol car and continue flying if you change your pension provider. That’s what I read into this new campaign – if I could make that switch, I would feel much less anxious about my own carbon emissions. That’s an easy way out. The psychology of this can work to make people not act to achieve actual carbon reduction.”

 He added that Make My Money Matter had not made the full methodology, with calculations, available.

Steinar Juel, a senior economist at Norwegian think-tank Civita and former Chief Economist at Nordea, called the Make My Money Matter campaign “unethical and dangerous”, claiming it gives the wrong impression to retail investors.  

“I think the methodologies and the message are absolutely wrong,” he told RI. “You cannot separate what is going on in the markets and what is going on in the real economy – the financial market is a follower of the real economy.”

David Hayman, Campaign Director for Make My Money Matter, said it was “absolutely not our intention” to mislead pension savers about the impacts of transferring money to sustainable strategies. 

“Our intent with the campaign is to encourage people to continue taking those important, meaningful, everyday steps, but make sure that their money is complementing those actions rather than directly undermining or contradicting, which is the situation we face right now. 

“You've got people who are stopping flying, which is great, but they will [also] be invested in the airline industry. You've got people who are stopping eating meat, but through their pensions they will be invested in factory farming. Our message is not to stop taking those really important steps, it's to make sure your money doesn’t undermine them.”

The Make My Money Matter campaign is backed by responsible investment stalwart and London School of Economics professor Nick Robins, who reviewed a draft of the research on a pro bono basis, but not the calculations. 

“Overall, I find this to be a very powerful piece of analysis, credibly showing how carbon emissions linked to use of financial products like a pension can be compared with other parts of a person's lifestyle, such as diet, housing and transport,” he said.