The UN’s International Youth Day may be over for this year, but the hopes and fears of 1.8 billion young people between the ages of 10 to 24 — the largest generation of youth in history– are very much still here. As a generation, we are ready to change the world for the better. Yet, with mounting fears about climate change and the mental toll of the coronavirus pandemic disproportionately impacting young people, it can be hard to plan ahead ,or  even have the mental space to envisage what that change might look like. This pattern is reflected in young people’s financial habits. A recent survey for reported that 24% of under 35s said they had no pension savings at all. But what if our pensions were a key to help deliver the change our generation so desperately wants to see?

With less than 100 days until COP26, asset owners across the globe are coming under increasing pressure to commit to Net Zero. Whilst a number of financial institutions have taken a leap of faith and made Net Zero commitments, others are less comfortable to do so. This is a problem GEFI’s Net Zero Pension workstream hopes to address as part of our broader Path to COP campaign, over the next 100 days and beyond.

The race to Net Zero pensions is one young people need to be paying close attention to. Greening your pension is 21x more effective at reducing your carbon footprint than the impact of giving up flying, going veggie and switching energy provider combined. Whilst looking ahead to our pension savings might not always feel like the most obvious step to make at the start of your career, it is one of the strongest suits we have to offset environmental damage and to in  safeguard a genuinely sustainable future.

Approximately £2.6 trillion are invested in UK pensions every year. As we learned across Day 2 of Ethical Finance 2021, much of this is invested in tobacco, arms, deforestation, fossil fuels and gambling. Yet, many people are completely unaware that this where their pension funds are invested, and are ignorant of the damage this is doing to the planet. Each year, the average UK pension member, unknowingly finances 23 tonnes of CO2 emissions through the businesses in which their pension invests. This is the equivalent of running nine family cars each year, or burning 1,100 coal fires annually.

Climate change and the environment is a key concern for the youth of today, with a survey  from Research Gate finding that 48.5% of climate protesters were under 35.  According to Raconteur, 62% of under-35s said they would engage more with their pension if they knew it was making a positive impact on climate change. Making the decision to invest in an ethical or Net Zero pension fund therefore presents a win-win opportunity where young people can save for their future, whilst simultaneously helping to save the planet.

At the Global Ethical Finance Initiative, we believe that financial sector must do more to engage with young people. Our Youth Voices at COP stream aims to facilitate this opportunity in the countdown to COP26 in Glasgow, opening up avenues for dialogue for young people who feel pushed out of conversations around the world’s biggest climate summit.  By turning our attention to Net Zero Pensions this Youth Day, we want to tackle the age old challenge of youth and pensions head on. Chartering a route away from irreversible environmental impact might seem like an overwhelming task but we are determined to get there, one (Net Zero) pension plan at a time.

Katie McKenzie