Cushon has launched what it describes as the world’s first net zero pension, using carbon offsetting to offset what it calculates are 23 tonnes a year of CO2 generated by the typical UK pension saver’s portfolio.
The workplace savings and pension provider, formerly known as Smarterly, which acquired the Salvus Master Trust, argues that it is the first of its kind in that it is net zero now, whereas competitors in the market have long-reaching targets to achieve net zero by between 2030 and 2050.
The launch has been backed by Richard Curtis, founder of Make My Money Matter.
Cushon is partnering with Vertree, a carbon offsetting firm created from a partnership between carbon trader Hartree and climate advisory firm Systemiq.
The launch pours fuel on the debate over whether offsetting, divestment or engagement are the most effective way to achieve a transition to a low carbon future.
The Cushon Growth Fund invests in a blend of LGIM Future World funds and funds from BlackRock and Vanguard.
Cushon’s estimate of an average 23 tonnes of CO2 per year per UK pension member is based on an average pot of £87,947 and figures showing the FTSE100 CO2 emissions of 480m tonnes over a £1.8trillion market cap, working out at 0.265 tonnes per £1,000 of investment.
The launch will also cater to growing demand in the market, as employees become increasingly concerned with the impact of their finances. Cushon research shows that 68.6 per cent of employees are concerned that their company pension could be investing in businesses that are contributing to climate change. It also found 48.2 per cent of employees would like the option to invest their pension in businesses that do not contribute to climate change and 39.8 per cent would like their employer to move to a pension provider that is making a positive impact on climate change.
Choosing to use a climate-friendly pension provider is an easy way for businesses to significantly reduce their employees’ contribution to global warming, taking a huge step towards protecting the environment we live in.
Cushon founder & CEO Ben Pollard says: “In 1995, the average carbon emissions per capita in the UK were 9.3 tonnes. Over the last 25 years we have actively managed to get this down to 5.6 tonnes, yet the way we invest our pension pots remains relatively unchanged and finances nearly four times our personal emissions. All this effort to reduce our carbon footprints by recycling and taking more responsibility in the way we live our lives, only to still significantly contribute to global warming through retirement saving.
“At Cushon, we know that people want their retirement saving to help tackle climate change without sacrificing returns. We wanted to find a very real way of making this work by delivering a pension that is net zero now. Not in 30 years, not in 15 years, but now. By choosing a net zero pension, employers are helping their employees have a direct and significant impact on climate change. The demand that we have already seen for our Net Zero pension is testament to this and we are now working towards being able to offer the same philosophy through our other product offerings.
“The idea of net zero investing is shamefully poorly developed within the fund management industry. We work with three of the largest fund managers in the world, and only one of them was even able to tell us the CO2 emission levels of their funds. To ensure there is no impact on returns, having reduced the emissions financed by the funds as far as possible via solutions that are currently available ‘off the shelf’ from our fund managers, Cushon is paying to offset any residual emissions out of the company’s own money. We have worked with Vertree to select a range of Verified Carbon Standard (VCS) projects, with 75 per cent of projects being triple, double or single gold rated under the Climate, Community and Biodiversity (CCB) Standard.
“This is just the start of the journey for us and we intend to do much more to eliminate CO2 emissions financed by the fund over the next 12 months”
Make My Money Matter Co-Founder Richard Curtis says: “The launch of a pension that is net zero now – not later – shows what is possible from the pensions industry when tackling the climate emergency is taken seriously. This new pension, with robust sustainability credentials, will be the first of its kind and so we are delighted to partner with Cushon as they continue to integrate environmental criteria across the board.
“This is the kind of leadership that the pension industry – and world – needs in the years ahead as we look to transition to a green economy post Covid-19. With COP26 taking place in Glasgow next year, all eyes are set to be on the UK and its environmental credentials, so it is great to have firms like Cushon taking concrete steps to address the climate crisis, which should hopefully incentivise more providers across the industry to follow suit.”