ESG reports explained: Understanding the impact of your investments

You may have heard that we have ethical funds at TPT that you can invest into with your pension savings. Even so, it can be difficult to know what this actually means. How can you find out exactly how a fund fares when it comes to its environment, social and governance (ESG) credentials, or how it compares to other funds?

That’s where our ESG reports come in. These handy reports can be found in the Fund factsheet area of our website and give a simple breakdown of how each of these funds are invested and how this aligns with ESG targets. They even show the fund’s carbon footprint by displaying how many kilograms of carbon are emitted per £1,000 invested.

This can help you see, at a glance, if a fund aligns with your ESG values and allows you to easily compare the impact of different funds.*This information is intended to support your understanding of the funds available. It does not constitute financial advice, and you should ensure you are comfortable with your investment choices or seek appropriate guidance where needed.

As an example, our default Target Date Fund, with a retirement date of 2050 – 2052 has a carbon footprint of 28kg of carbon per £1,000 invested, with a carbon reserve intensity of 232kg of carbon per £1,000 invested. When it comes to how the companies this fund invests in are run, 66% of them have a majority of independent directors on their board and 56% of them have at least 30% female representation on their board. Additionally, 79% of companies in this fund also have a policy on human rights in place.

These metrics are based on underlying company disclosures and third‑party data, which may not be available for all investments and may change over time.

By contrast, our Ethical Target Date Fund (with the same target retirement date of 2050 – 2052)** has a carbon footprint of just 12kg of carbon per £1,000 invested, with a carbon reserve intensity of just 1kg of carbon per £1,000 invested. With regards to governance and management, 75% of companies in the fund have a majority of independent directors on their board and 65% of them have at least 30% female representation on their board. In addition, 89% of companies in this fund have a human rights policy in place. From this, you can see the difference in the way the Ethical Target Date Fund is invested when compared to the equivalent standard TDF, including differences in carbon footprint, carbon reserve intensity, management structure and more. There are other differences too, that are explained in more detail on the ESG report for each fund. If you don’t know what some of these terms mean, don’t worry – they are explained within the reports.

This comparison is just between two different funds with a target retirement date in mind. But with TPT there is a large variety of self-select funds that you can choose to invest some, or all, of your pension in – and these all have varying ESG credentials too. Some simply focus on investing in a specific asset type where others have a real ESG focus. If you want to look at the ESG credentials of any of these funds in more detail, simply view the corresponding ESG report.

Of course, there’s more to pension investing than ESG, and different funds could have varying performance when it comes to investment returns. ESG characteristics do not determine or guarantee investment performance, and funds with stronger ESG metrics may perform differently to those with lower ESG scores. 

That’s why it’s also important to view the fund factsheet for each fund, to get a better idea of how exactly a fund is invested and what sort of investment performance it may deliver.***

Remember that if you’d like to make a change to the way your pension is invested, you can explore and change your investment funds at any time in the Manage area of your online account.  Before making any changes, you should consider whether the investment remains suitable for your circumstances, and you may wish to seek guidance or advice.

* ESG figures are based on available data and third‑party information and may involve estimation. They are provided for indicative and comparative purposes only and may not be directly comparable across different funds or providers.

** The term “ethical” refers to the way the fund applies environmental, social and governance considerations within its investment approach. This does not necessarily mean the fund will outperform other investments or that it will meet all individual ethical preferences.

***Past performance is not indicative of future performance. The value of investments can go down as well as up, and you may get back less than you invest.