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  • Writer's pictureCiaran Hughes QFA

Retire with a clear conscience

Updated: Jan 31, 2021

Author note: Ciarán Hughes is a financial advisor at Ethico and an expert in ethical and sustainable investing solutions with 10 years+ experience in financial services.

How your pension is invested can have a big impact on the environment, society, and the next generation

Grandmother washing berries with granddaughter at sink in whits kitchen

We all aspire to a have a secure and enjoyable retirement. To achieve this, many of us have made pension contributions over the years and our investment pots have grown. This is positive, but it is not the full story.

Like most people in Ireland, it is likely that you are unaware of the problems with traditional pension funds. While these funds invest in a broad range of assets they also:

  • Invest in negative industries like tobacco, weapons, nuclear, oil, coal & gas.

  • Invest in some companies that flout environmental and labour standards or that lack diversity and socially positive management.

  • Invest in companies that accelerate global warming through high carbon outputs - many have no timely plans to make a credible transition.

Once these points are understood, it becomes clear that most people are not comfortable investing in or supporting these types of companies. Especially as these negative externalities will be borne through your retirement and by future generations. So how do we retire with a clear conscience? There is a solution...

Ethical investing falls under many different acronyms in the pensions industry, but ultimately it does 3 main things.

Ethical fund managers:

  • Remove the negative industries from your fund. There are various levels of negative screening available, but at a minimum the worst offenders will be removed.

  • Include positive companies provided they meet strict environmental, social, and governance criteria.

  • Monitor and engage with companies to keep them on a positive and improving trajectory. If companies fail to maintain these standards they will be removed from your fund.

Ethical pension funds are growing in popularity at an exponential rate, and tangible changes can be seen in corporate behavior because of this. Securing funding and growing their share price is a powerful motivator for companies. You can have a positive effect by demanding better through your pension savings.

Another important point worth noting is that ethical funds produce significantly less carbon than traditional funds. Taking an average pension as an example, lifetime carbon savings would be approximately 1,000 tonnes of CO2e or in lay man's terms the equivalent of 1,400 flights from Dublin to New York. That's a considerable saving for the environment.


Next steps:

We are advocating that people in Ireland consider making the switch to Ethical pension funds. The benefits are apparent above, and it is a win-win as there are no downsides. Historical fund returns are comparable and switching is easy.

Ethico are impartial financial planners, retirement advice specialists and experts in ethical investing. We help people with existing or previous pensions, investment savings, and protecting their financial future.

You can find more information on the services we provide here

If you wish to contact us directly you can do so here

We believe that retiring with a clear conscience is not an aspiration, it is simply a choice.

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