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Earth Day 2022

By CIRCA5000 TeamBack to Mission Control

Why We’re Offsetting 100 Tonnes of CO2 For Aviva’s Customers on Earth Day 

Do you know what your pension is invested in?

Investors often don’t know their pension portfolios include fossil fuel companies. In the UK alone, an estimated £128 billion worth of pensions are invested in non-renewable energy sources. Indeed, the Guardian has reported that a significant number of investors are unknowingly funding the climate crisis with their retirement plans. At the same time, experts have said that simply switching to fossil fuel-free pensions could be over 20 times more powerful in the fight against global warming than giving up meat, flying, or choosing a green energy supplier. 

That’s why, to mark Earth Day, we’re intervening to offset 100 tonnes — roughly the equivalent to the emissions of a diesel car over 600,000km — of carbon dioxide from a portfolio typical of that offered by companies like Aviva, some of which count BP and Exxon Mobil among their ranks. 100 tonnes might sound big, but it amounts to a mere ​​0.0055% of the portfolio’s additional CO2 output from the decision to include fossil fuels. 

It’s hard to emphasise just how large a carbon footprint fossil fuel-containing pension portfolios have. This is really bad news for the planet. And it’s even worse news for investors’ futures. Here’s the issue: Investing in any pension portfolio containing fossil fuel businesses is going to have a pretty hefty carbon footprint — and there’s very little a customer can do to filter them out.

The good news? CIRCA5000 pensions not only screen out these companies by default, but actively seek to include those improving the world we live in.

Why traditional pensions are proving inadequate in the fight to save the planet.

A staggering £2.6 trillion is invested in UK pension schemes. But most people have little or no control over where this money goes. In recent years, investors are taking a more active role in where they put their money. But they have a dearth of choices when it comes to providers that put the planet and its people first. It’s this lack of options that’s stopping future-focussed investors from making the right moves. 

Environmental, Social, and Governance standards alone aren’t enough.

It’s true that Environmental, Social, and Governance (ESG) standards have boomed over the last decade. These are supposed to act as filters to block out investments that do harm. ESG has certainly allowed investors to increasingly put a spotlight on the sustainability credentials of traditional funds. But a recent investigation by Bloomberg News has shown that ESG often falls short. The report showed that MSCI Global, the world’s largest provider of financial analysis indices and ESG rating systems, ranks BP, ExxonMobil, and Chevron as ESG compliant. This hardly inspires confidence. 

Why CIRCA5000 pension portfolios are different.

Our pensions don’t just cut out businesses that are bad for the planet — like the oil and gas giants in Aviva’s portfolio — but actively include those working to enrich the future. Companies in our Clean Energy fund produced 832m MWh of renewable energy last year and saw 15 million families get access to clean energy. This is because we ensure that the businesses our customers invest in only ever positively impact the future of humanity. We do this by keeping UN Sustainable Development Goals as our north star, speaking to fund providers about underlying metrics, and constantly reassessing funds.

By offering customers investments into companies that are making profound differences, we’re able to give them more control over their footprints and help them shape their future — and the future of humankind. CIRCA5000 pensions ensure that when it comes to investing, every day is Earth Day.

Here’s how we made the calculation: Aviva has a total of £235 billion in assets under their management. In a usual pension portfolio, we would expect that 50% of this would be made up of equities. That means shares in private companies, rather than assets like government bonds or gold. As such, we can make the assumption that the total value of equities under Aviva’s pension management is about £117.5 billion. We can also estimate that 75% of these equities are classed as unrestricted, meaning they are not restricted by Environmental, Social, and Governance guidelines. This means they can include fossil fuels.

If we look at two funds comparable to those included in Aviva pension portfolios, the MSCI World and the MSCI World SRI (this is the version of the fund without any fossil fuel investments), the difference between the fund with fossil fuels and the one without, in terms of carbon footprint, is about 15.3 tonnes per million dollars invested. We can assume that Aviva’s unrestricted portion of assets under management in pensions has the same carbon footprint. That means the total carbon footprint comes to 1,806,739. This means offsetting 100 tonnes of this CO2 equates to about 0.0055% of their footprint.

References: 

 https://www.pensionsage.com/pa/128bn-of-pension-fund-money-invested-in-fossil-fuels.php

https://www.theguardian.com/environment/2021/nov/15/how-workers-unknowingly-fund-climate-crisis-pensions

https://www.euronews.com/green/2022/02/15/green-pensions-could-be-the-most-powerful-weapon-we-have-to-protect-the-planet

 https://mechanicbase.com/cars/car-weight/

https://www.bloomberg.com/graphics/2021-what-is-esg-investing-msci-ratings-focus-on-corporate-bottom-line/

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