More pension schemes are committing to net zero and telling members about it. Here’s how to communicate it well.
We all know now that talking to members about what their money gets up to while it’s invested is one of the best tools we have to get them interested in their pension. So net zero should help us do the same thing, right? Well. Yes. But…
Pensions are hard to understand. Net zero is very hard to understand. Put the two together and you have a perfect storm of hard-to-understand-ness. Plus, whenever you find yourself using the word ‘zero’ in the same sentence as ‘pension benefits’ or ‘savings’, you need to be careful you don’t send members running for the hills. Here are some tips to help you bring your net zero commitment to life, to engage your members, and to avoid the pitfalls.
1. Define net zero
Most people have heard of net zero, one way or another now. But even if they can define it, they have differing views of what it actually means.
In 2021, the UK government commissioned a study into what 93 diverse people in the UK understand and think about how climate change will affect them individually, society at large, and we should do about it. Here’s one quotation from the report, 2021 Net Zero Public Dialogue:
‘I’ve heard of [net zero], but I don’t know the details and I don’t really understand it.’
So, explain what you mean by it. Here’s an example definition:
It’s short for ‘net zero emissions’. This is when the amount of greenhouse gases, like carbon dioxide, being emitted into the atmosphere matches the amount of carbon being removed from the atmosphere. So there’s zero in total.
To reach net zero, we need to reduce emissions as much as possible, and match any leftover emissions with activity that removes carbon, like planting forests.
The transition to net zero will affect us all in more areas than just pension savings. So, if you as a pension scheme can help your members understand it, they’ll thank you later.
2. Put net zero in context
You’ve defined net zero, but it doesn’t mean anything yet. Put it in the context of climate change, to show why it’s important.
Here’s an example:
Human activity is warming the planet. This warming is causing sea levels to rise, species to disappear, and extreme weather events to happen more and more frequently.
To avoid more catastrophic and irreversible change, we need to limit this warming.
And to limit this warming, we need to reach net zero emissions.
3. Explain why it matters to people's money and their future
Lead with the money
Members are looking to you to keep their pension safe, and help them have a financially secure retirement. Show them you’re committing to net zero so you can do just that – so you can protect their pension from the risks of climate change. And so you can make the most of any opportunities to help their money grow, or to strengthen their scheme.
Bring this to life by telling your members that their money is invested. Give examples of how investments in heavy polluters need to be addressed to protect them from the risks of climate change. And how investments in the solutions, like clean energy, will help deliver the transition and make their money grow. We’ve written an insight piece about responsible investment: why and how talk to members about it.
But don’t hold back on the power of pensions
When people find out their money is invested, they want it to do good.
But less than half of us know that pensions can play a key role in tackling climate change, according to research from Aviva. So, as long as it fits with your investment beliefs, now is the time to shout – to show your members that theirs is a pension to be proud of.
Although it’s always a good idea to round off the thought with the money point again
To reassure anyone who thinks that doing good means making less money, remind them: this net zero commitment is good for your money and good for the world. It’s win-win.
Here’s how Railpen put it:
We have a dual responsibility to make our fund resilient to systemic threats, and to use our scale and influence to effect positive change in the world.
And here’s how the Tesco pension scheme put it:
Delivering members’ pensions is our key priority. But we can also play our part in supporting the aim of a low-carbon world, to help reduce global warming.
4. Say when you’ll reach net zero
Give the year you’re aiming for, and give that year a bit of context. For instance, you could point towards the UK’s commitment to reach net zero by 2050. Or the Paris Agreement – although you’re then going to have to explain that one.
2050 is a long way away – it’s fairly meaningless. Humans are bad at imagining what their life will be like in a year’s time, let alone in decades’ time. So move quickly on to how you’re going to make this happen, and what you’re doing in the much more immediate future. Or, even better, what you’re doing right now.
5. Show how you’ll do it
For most schemes, their main activity will be engaging with investee companies – either through their own team or by delegating to their manager. Engagement is perhaps the most powerful tool in the industry, and yet the most meaningless word when used outside the industry – for example when talking to your members.
So if you’re telling members you’re going to encourage the companies you invest in to reduce their emissions, paint a picture of what that looks like.
How do you do it? What’s so important about these meetings? And votes? How does that create change? How does that make things better for my pension pot and the planet? Be as tangible as you can.
If you’re still thinking about the steps you need to take, download our journey to net zero graphic.
6. Keep numbers simple
If you’re sharing your metrics with your members, keep those numbers simple and relative. For instance, if you tell everyone that the current portfolio is responsible for 29312987214 tonnes of carbon, that doesn’t mean a whole lot.
Talking in ‘degree pathways’ is a bit easier to understand – because it means smaller numbers. For instance, maybe your investments were on track to contribute to a global temperature rise of 4 degrees by 2050, but now they’re on track for a manageable 1.5 degrees.
If you are using big numbers, including previous years’ metrics to compare to can help. And you can always turn those big numbers into equivalents – try using the United States Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator.
7. Link net zero to your sponsor
If your sponsor’s also doing great things when it comes to net zero, use this opportunity to link the two, and help active members connect their pension with their employer.
8. Give members an action to take
What do you want your members to do about this information? To learn more? To up their contributions? To have their say through Tumelo’s tool? You’ve got them interested, so now’s the time to encourage action.
9. Make it shareable
People really care about making the planet a better place, according to research by the Defined Contribution Investment Forum. They take actions everyday – from recycling paper to boycotting companies they don’t agree with. And they also can’t help a bit of virtue signalling – they like to talk about their sustainable activities. (And is there really anything wrong with that if it might encourage others to do the same and make the world a better place?)
So, tell your members about their net zero pension in words they’d use – so they can use those words to tell their friends all about it. You’ll help fuel their egotistical altruism – they’ll feel good about doing a good thing, and want to brag about it just a little. And you might do, too.
10. Test with members
Ask them what they want to know more about, what they want to know less about. They’ll tell you what they like, what they don’t like, and what needs fixing.
You don’t need to test with hundreds of members. As few as 5 could give you insight you can act on.
Let us know what you find
How are you finding talking to your members about net zero? When it comes to net zero, we all need to work together. So if you have any tips or tricks to add to this list, email me.