Almost three out of four women aged 40 or over want their pension funds to divest from companies with poor pay practices, according to a new survey.
The survey by Legal and General Asset Management looked at gender and generational differences when it comes to making environmental, social and governance factors part of any investment decision.
The research found a smaller proportion of men aged 40 and over were supportive of such measures. Just 59 per cent of men wanted pension funds to divest from companies with poor pay and governance practices, compared to 74 per cent of female ‘baby-boomers’ (aged 55-65) and 73 per cent in the ‘generation X’ age group (aged 40 -54).
However younger women were more split on this issue. Only half of millennial women (aged 25-39) would follow the same policy of cutting out these companies from their pensions.
LGIM’s findings highlight a strong contrast between the relative importance of social and governance issues to older generations, and the views of younger people, who are more focused on climate issues.
Millennials were more likely than any other generation to want to reduce their exposure to the fossil fuel industry, despite any potential consequences. Even if there was a resulting performance impact, 45 per cent of millennials would opt to divest their pension from fossil fuels. This compares to 30 per cent of generation X, while baby-boomers (at just 23 per cent) were half as likely as millennials to divest from fossil fuels regardless of the investment outcome.
LGIM also found that across all age groups nearly half of all adults (49 per cent) would prefer a policy of engagement to encourage change, before divesting.
It is also notable that only half of respondents were already aware of the types of investments within their workplace pensions, implying many more may not be aware of possible inconsistencies between these investments and their own beliefs.
LGIM head of defined contribution Emma Douglas says: “This should be a wake-up call to the industry. There is clearly a role for more education, helping people to understand and shape the impact their pensions make on the world.
“It’s also clear that older generations do care about doing the right thing with their money, but they are more likely to prioritise issues where they have real-life experience or see a financial impact. In particular, women who have decades of lived experience in the workplace are most aware of the difficulties that poor governance and pay policies can have.
“While this research was conducted prior to the global pandemic, we’re seeing the same trends only further highlighted in recent weeks. Social and governance issues appear to have risen in importance for all demographics. With a spotlight now being shone on these issues, we believe that fair treatment of employees, particularly around pay and poor labour practices, will continue to gain prominence among members of all ages.
“Our survey shows that there are many different views and issues at play under one ‘environmental, social and governance’ banner. Taking appropriate action through all the tools available, particularly through engagement, will be key in contributing towards the building blocks of a better future as we emerge from this crisis.”