Sustainable Finance Trends in Pension Fund Investments


Pension researchers find individuals prefer more sustainable investments

Sustainable investment has been growing rapidly in recent years. But are individuals willing to put their pension savings on the table to promote sustainability? A recent study from the Netherlands says yes.

On March 22, 2021 the National Pension Hub of the Global Risk Institute hosted Dr. Rob Bauer from Maastricht University to share some insights from his forthcoming article for The Review of Financial Studies entitled “Get Real! Individuals Prefer More Sustainable Investments”.

 

Rob Bauer

Rob Bauer
Executive Director, ICPM
Bio

In his remarks, Dr. Bauer discussed how should pension funds interpret their fiduciary duty in regards to sustainable investments. He shared the outcomes of a study that conducted two field surveys with a pension fund that grants its members a real vote on its sustainable investment policy. The study found that two-thirds of the participants favored investing their pension savings in a sustainable manner, even facing expected lower financial returns.

Fast facts from the study

  • The study found 67.9% of participants favored increasing the pension fund’s engagement to increase the sustainability of the companies in which it invests. Only 10.8% were against the increase, whereas 21.2% had no opinion.
  • The results from a non-consequential question showed 74.4% of respondents also favored portfolio screening based on the four SDGs.
  • Social preferences rather than financial beliefs or confusion drove the choice for more sustainability.
  • The support for extra sustainable investments has remained strong during the global COVID-19 pandemic.
  • 9% of participants who previously were against more sustainable investing state their agreement with the steps the fund undertook in 2020.

For more on Dr. Bauer’s study and his remarks, please listen to the audio file below: