Nowadays, employees are increasingly making conscious choices and asking their employers to make responsible choices in order to contribute to a better world. The best form of conscious, sustainable decision-making concerns your pension scheme. ‘What many people don’t realise is that small changes to your pension can make the world of difference,’ says Commercial Director Jan Hein Rhebergen from pension provider BeFrank.
The Future of Pensions Act has now come into force, meaning that as an employer, you need to take a close look at your pension scheme during the transitional period leading up to 2028. That is also an excellent opportunity to look into ways to increase your sustainability. ‘As an employer in a complex labour market, you want to attract the right people,’ says Rhebergen. ‘Recent research conducted by Friends of the Earth Netherlands (Milieudefensie) reveals that one in five young people are stressed about the climate. At the same time, we have noticed that this issue is becoming a criterion for this group when it comes to deciding where they want to work. And so employers would be well advised to take sustainability seriously. It’s not just in your product’s DNA (whether you’re a large chemical company or out to save the world) – it’s also about implementing your sustainability vision in a credible way, which could be through your pension scheme.’
That’s not simply an employment condition that you make a little more sustainable: the pension world accounts for approximately €1,750 billion. As a result, small adjustments can make a big difference: ‘With all that capital, shifting a tiny bit to the left or right on the ‘green’ balance sheet has a massive impact. Lots of employers are making serious changes in order to make their premises carbon neutral, switching to electric cars and separating rubbish, but they’re still devoting relatively little attention making an impact through pensions.’
For that reason, BeFrank has introduced sustainability choices into their pension scheme, for both employer and employee. ‘With us, employees can choose how green they want their investment to be,’ says Rhebergen. ‘We offer three options: the first option excludes ‘bad’ companies, the second goes a step further with CO2 ambitions and the third option only includes ‘good’ companies with a proven global impact. So, as an employee, you’re also in control: what kind of world do you want to be living in?’
Employers can also make an impact by selecting a default option that offers above-average sustainability. ‘As a result, you can show potential talent how much you are saving in terms of CO2 emissions through your investment choices compared to the average for your industry. With those figures, you can demonstrate to your current staff that the impact of sustainable pension choices on CO2 emissions is far greater than the impact of opting for green electricity or a hybrid vehicle fleet. If there’s one way to change the future, it’s definitely through a pension scheme. The fact that so much money is involved means you really can change the world by doing this.’
30% of participants active choices
Rhebergen believes that it’s a misconception that employees have nothing in place in terms of a pension. ‘That’s an old belief that the pension market can’t seem to shake off. We see things fundamentally differently. With us, 80% of participants have viewed their personal pension page and 30% have actively selected an investment profile. If, as a participant, you have the opportunity to make your own choice and you have the right information, you will actively make that choice. The same goes for young people. We have conducted a campaign aimed at young people, with the motto: ‘Did you know that you’re an investor?’ We launched the campaign because 70% of all investors are under the age of 35. Young people don’t find investing silly, but they do often feel the subject of pensions boring. When we pointed out that pensions are a form of investment and that you could choose to do nothing, that really sparked interest – they absolutely did want to make choices. It’s up to pension providers and employers to find the right tone and make it clear to participants that they have choices when it comes to sustainable investing. It’s definitely an extra incentive for young people to start making choices. In turn, that will boost the status of the pension as an employment condition.’
Rhebergen says that employers put an awful lot of money their pension schemes, and so you want appreciation for that. ‘We’re committed to making pensions fun, accessible and mouldable. The impression that somebody’s pension is a long way off and therefore a boring topic needs to change, and I think that process of change started a while ago. We want to get people involved in shaping their own financial future.’
A transparent impact
BeFrank provides annual statements showing the impact of investments on sustainability. ‘We also offer a dashboard where we present that information in real time. You can see the benchmark and the saving on that as a result of the investment choices you have made. There are residual emissions that employers can still offset by planting trees.’In the online environment, employees can also check how much CO2 they will save by switching to a greener investment option.
Rhebergen explains that BeFrank is also making an impact as an organisation. ‘We closely monitor how much we’re travelling and how much energy we’re consuming, for example. That includes our data consumption and the impact of our data storage. So we go to great lengths. We have so far been able to reduce our carbon footprint each year and our operations are carbon-neutral on balance because we offset our residual emissions. Moreover, we’re now in a circular office building,and we really involve our employees. For example, we have upholstered chairs using old jeans from BeFrank’s own employees.’
In short, Rhebergen is saying that while BeFrank is committed to sustainability, there is always room for improvement. ‘Sustainability, or ESG, is not just about the environment – there’s also a social aspect and a governance aspect. And those two aspects are not as easy to quantify, but we’re working on them by investing in projects that focus on the social aspect of the production chain. That’s the next step.’
This article appeared on PWnet on 30 October