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Communicating about responsible investment – a quick pensions industry guide

Communicating responsible investment

Our 2018 Responsible Investment Report, Building New Norms, outlines recent findings from member surveys that show savers want to learn more about how their pension pots are invested. Positive stories about the environmental, social and financial benefits of investing responsibly particularly resonate. They also build trust, confidence and interest in pension saving.

We were struck by these findings. So, we brought a range of pensions, communications and behavioural finance experts together to explore how the pensions industry can learn from them.

Here are five takeaways from the discussion summarising the views of the experts in the room, on how to communicate more effectively with members about responsible investment:

Be brave:

The pensions industry has self-censored to a certain extent when it comes to talking about responsible investment themes, being reluctant to go public on their activities for various reasons. But latest guidance from the government states that pension schemes should be considering things such as environmental risks in their investment approach. Evidence shows that members welcome knowing more about this and there could be reputational risks to not taking these issues seriously. As an industry, we can and should be braver. 

Find a common language:

Often in the pensions industry we use countless terms to describe the same thing, which only leads to confusion and turns members off. We need to establish a common language for talking about responsible investment in a way that makes sense to industry outsiders. Bring members into this process to help, and recruit members to co-write, edit and give feedback on communications. Start with their perspectives first and what they’d want to hear. Only then involve your compliance teams. Don’t start with compliance rules in mind or try to second-guess what the compliance team will say.

Focus on benefits and avoid jargon:

If you ask most people what a pension is, they’ll tell you it’s money you get in retirement. They’re interested in the outcome not the process, so focus on the benefits to members. But bear in mind that many pension savers don’t realise their money is invested and may not understand how investments work. Explain new concepts clearly, simply and without jargon. One way to do this is to relate members’ investments to the real world. Find examples of how members’ money has been invested in their local area and tell them about it. Talk about the real-world impact their money is having and put it in terms of everyday items or experiences. 

Think about framing:

Frame communications with the audience in mind. For example, think about gender and age. Research shows different people respond differently to language and framing. There’s also often a trade-off in many people’s minds between making money and doing ‘what’s right’. Most often, financial gains take priority and things that are seen as good for the planet or society are side-lined. However, evidence from a recent meta-study of more than 2,000 academic studies on the subject, shows this trade-off is a myth. So let’s make the financial benefits of a responsible approach clear. Actively managing environmental, social and corporate governance issues can lead to better long-term risk-adjusted returns. We can provide information that chimes with members’ values as well as inform them about financial returns.

Test, learn and test again:

Videos, podcasts and other new forms of communication are great, but tests suggest members could be more likely to trust a straightforward email, written clearly and sincerely. We need to start communicating more with members about these topics so that we can test what works and what doesn’t. Only then can we make incremental improvements. This is how the tech or retail sectors would approach things – we can learn a lot from them.

We would like to thank all those who took part in the discussion for these useful insights. We hope they can help the pensions industry progress its communications with members and look forward to working with others to implement these recommendations.

Participants included representatives from UK100, NOW: Pensions, The Carbon Tracker Initiative, Independent Trustee Services Ltd, Business Green, FT Adviser, Defined Contribution Investment Forum, The People’s Pension, Quietroom, UKSIF, Responsible Investor, The Behavioural Insights Team, ShareAction, Hargreaves Lansdown, Smart Pensions, Good With Money, KPMG, Investment and Pensions Europe, BlackRock, The Pensions Regulator, Ignition House, Pensions Policy Institute, The Guardian and Trade Union Congress.

Last updated: 05/20