Farrell, A. et al.Greening pensions: A behavioral perspective

Recommended reading

Alice Farrell, Kristina Londakova, Izzy Brennan, Jake Reynolds & Toby Park

Release date:
July 2021

BIT – The Behavioural Insights Team, London, report

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:

  1. Provide pension-holders with regular feedback on the environmental performance of their pension pots 
  2. Label pension funds to communicate environmental performance
  3. Make green pensions the default
  4. Force a periodic active choice between potential pension funds
  5. Make it easy for pension-holders to switch old pension pots to a greener fund
  6. Provide clear and timely information on businesses’ environmental impacts for pension fund managers
  7. Reward high-quality disclosure by businesses, and highlight the short-term commercial benefits

Link to publication