Green Nudge to Greater Knowledge: COP26 trials launched
Over 160,000 pension scheme members will be encouraged to learn more about making greener pension choices in a new three-week trial.
Commissioned as part of the government’s ambitious COP26 agenda, the “Green Nudge” trial will test the impact of behavioural nudges and messages on increasing saver engagement with the sustainability of pension investments and how this could translate into greener pension decision-making.
The DWP, in partnership with the Behavioural Insights Team (BIT), is working with Aviva, Smart Pension and Hargreaves Lansdown to deliver the “nudges” to members to encourage savers to invest in more sustainable pensions or learn more about the sustainability of their pension.
Minister for Pensions Guy Opperman said:
Through the productive long-term investment power of pensions, we can help the UK get to net zero and deliver both investment returns and a sustainable planet.
These trials will give us vital insight into how interventions can boost saver engagement and encourage greener choices. I look forward to seeing the results.
Emma Douglas, Director of Workplace Savings & Retirement at Aviva, said:
We are pleased to partner with the Department for Work and Pensions (DWP) on this trial, particularly because it focuses on two incredibly important issues. Increasing engagement with pension saving is a top priority for our clients and for Aviva, and this trial will consider whether customer messaging around climate change can prompt people to engage more. Of equal importance is educating savers about the role their pension scheme investments can have in achieving net zero ambitions, and this trial will do that too. It is a real win-win opportunity for providers, consumers and ultimately, climate change.
Fiona Smith, Investment Proposition Manager at Smart Pension said:
At Smart Pension we are strong believers in delivering better outcomes and promoting sustainability. Having carried out lots of research in these areas, the majority of our funds are already invested in companies with a strong environmental focus.
We are research-driven and the technology behind Smart Pension is built on more than one million hours of research with savers and developers which incorporates tests like these. Smart’s Head of Innovation, Harry Brignull, recently spoke to the EU Parliament on how to use ‘nudge’ technique in a more positive way, and we are delighted to be working the DWP and our peers to expand this knowledge across the industry.
Nathan Long, Senior Analyst, Hargreaves Lansdown said:
We’ve seen first-hand how using nudges can help improve people’s engagement, the choices they make and ultimately their financial resilience. This important work comes at a time when increasing numbers of people are looking to use their investments and pensions for good but need more help to do so. We’re also interested to see to what extent the low levels of understanding of how pensions are invested acts as a barrier.
Johannes Lohmann from the Behavioural Insights Team (BIT) said:
Our ability to chart a path to net zero depends on many important behaviours and decisions, and how we decide to invest our pensions can have a pivotal effect. In this project, we are excited to work with DWP and three industry partners to apply behavioural science to the important issue of member engagement in green pensions.
The results of the project will be published later this year.
In 2021, the UK became the first country to legally require pension trustees to assess and publish the financial risks from climate change, helping make pensions better for people and the planet.
Paving the way for greener pensions as part of the transition to net zero will create opportunities to invest in green businesses, support jobs for the future, and help grow a stronger and more sustainable economy.
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