“How can we entice savers to look at how much is in their pension pot? How can we make pensions more dynamic and interesting to our beneficiaries?” asks Jennifer Anderson, responsible investment officer, The Pensions Trust, the £7 billion scheme which manages pensions for the UK’s charitable sector.
The problem under discussion at the UN-backed PRI in Person 2015 conference was the lack of interest among many pension beneficiaries in how their pensions are managed, and even less knowledge or appetite to drive ESG investment strategies.
“ESG is an opportunity to draw in interest,” argues Catherine Howarth, of pressure group ShareAction who believes the wholesome image of ESG will sit better with savers grown weary of financial scandals. “Financial services and investment comes low in public trust. Rebuilding it is an opportunity and listening to beneficiaries is a great way of getting back public trust.”
But as well as listening to beneficiaries, pension funds would do well to study human behaviour over time, suggests Rory Sutherland, vice-chairman, Ogilvy & Mather UK.
Trends in human behaviour, seen through his expert marketing lens, offer valuable and different ideas on what could motivate people to care more about ESG.
Sutherland believes that consumer behaviour shows that sustainable and responsible concepts or inventions will do best if they “only do good by stealth.”
“Don’t always tell everyone. Things are best chosen not prescribed.”
Similarly too much eagerness to display altruism can be counter productive.
He suggests that people have fixed expectations around the products they buy or the ideas they favour that are best left alone.
“Fly spray should smell horrible; an energy drink shouldn’t taste particularly nice because otherwise it will be less effective,” he says to illustrate the point.
He believes that the best way to pursue the take up of an idea is to not pursue it directly.
“The most profitable businesses don’t pursue profit directly. The most successful are pursuing another motivating end.” Hiking prices to take advantage of others misfortune is “an economic no no,” and he says that humans have an innate and powerful sense of fairness. Moreover, when people are given something for free they “feel good.”
“Really clever businesses understand this psychological factor.”
He suggests that even though many people are motived primarily by self-interest, this can often lead to a net value for society as a whole.
Ordinary self-interested capitalism gets a “bum rap,” yet many corporations also have valuable and important social and sustainable seams to their business that are often invisible.
“Lots of sustainable activity within a business isn’t branded as sustainable because it wasn’t an original motivation,” he says.
Similarly many consumer goods have important benefits that were not the original intention behind the invention.
“Soap sellers at the turn of the last century helped stop disease, but soap wasn’t marketed for this. Capitalism does things that are invisible and not intended.”
“Understanding the complexity and phycology in business can lead to fantastic things. Consumers as well intentioned, people are well intentioned.”