The “Green Nudge” trial, which was commissioned as part of the government’s ambitious COP26 agenda, will examine the effectiveness of behavioural nudges and messaging in raising saver involvement with pension investment sustainability and how this can transfer into greener pension decision-making.
The DWP is working with Aviva, Smart Pension, and Hargreaves Lansdown in collaboration with the Behavioural Insights Team (BIT) to provide “nudges” to members in order to persuade savers to invest in more sustainable pensions or find out more about the sustainability of their pension.
Guy Opperman, the minister for pensions, said:
We can assist the UK in reaching net zero and deliver both investment returns and a sustainable planet through the effective long-term investment power of pensions.
These trials will provide us with crucial information about how interventions might increase saver engagement and promote eco-friendly decisions. I’m eager to see the outcomes.
Director of Workplace Savings & Retirement at Aviva, Emma Douglas, stated:
Given that this trial focuses on two extremely significant issues, we are happy to collaborate with the Department for Work and Pensions (DWP) on it.
For both our clients and Aviva, increasing engagement with pension saving is a critical concern.
This experiment will examine whether customer messaging about climate change will encourage people to engage more.
Equally crucial is informing savers about how their pension scheme investments can help them realize their goals of achieving net zero, and this trial will also achieve that.
It’s a genuine win-win situation for businesses, customers, and ultimately the environment.
According to Fiona Smith, Manager of Investment Propositions at Smart Pension:
Delivering improved results and fostering sustainability are values we hold dear at Smart Pension. The majority of our money are already invested in businesses with a strong environmental focus as a result of extensive study we’ve done in this area.
We are a research-driven company, and the technology underlying Smart Pension was created after more than a million hours of collaboration with developers and savers, including tests like these.
We are thrilled to be working with the DWP and our peers to spread this expertise throughout the sector.
Smart’s Head of Innovation, Harry Brignull, recently spoke before the EU Parliament on how to apply the “nudge” method in a more positive way.
Senior Analyst Nathan Long from Hargreaves Lansdown stated:
We have firsthand experience with how applying nudges may enhance people’s participation, decision-making, and ultimately financial resilience.
This crucial work is being done at a time when more individuals are trying to use their pensions and assets for good, but they need more assistance to do so.
We’re also curious to see how much a barrier the lack of knowledge about how pensions are invested is.
Behavioural Insights Team (BIT) member Johannes Lohmann said:
The choices we make regarding our retirement investments can have a significant impact on our ability to find a path to net zero.
We are thrilled to collaborate with DWP and three industry partners on this initiative to apply behavioral science to the crucial problem of member involvement in green pensions.
The project’s findings will be made public later this year.
Pensions got better for people and the environment in 2021 when the UK became the first nation to formally mandate pension trustees to evaluate and disclose the financial risks posed by climate change.
Making room for greener pensions as part of the move to net zero will open up opportunities for investment in green firms, boost long-term employment growth, and contribute to the development of a more robust and sustainable economy.