In this report, BIT – The Behavioural Insights Team contributes to the emerging conversation on green pensions by highlighting the benefits of using a behavioral perspective. The authors outline seven ideas, grounded in behavioral science, to achieve a greener pensions system and help to avert the climate crisis.
The authors start upstream to consider the pensions market itself, examining how to apply behavioral science to ensure pension-holders have a wide range of truly green pensions to choose between. They then move downstream to the individual level: how to encourage individual pension-holders to switch to greener options?
The ideas are:
- Provide pension-holders with regular feedback on the environmental performance of their pension pots
- Label pension funds to communicate environmental performance
- Make green pensions the default
- Force a periodic active choice between potential pension funds
- Make it easy for pension-holders to switch old pension pots to a greener fund
- Provide clear and timely information on businesses’ environmental impacts for pension fund managers
- Reward high-quality disclosure by businesses, and highlight the short-term commercial benefits
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