What Climate Week can teach us about saving for retirement

Every June, London hosts a major international gathering. London Climate Action Week (LCAW) brings together experts, organisations and advocates with one shared goal: turning climate commitments into action.

And action can come from surprising places - including your pension.

Because the money in your pension is invested in companies helping shape tomorrow's economy.

So while climate action and retirement saving may seem unrelated, they both reward long-term thinking and rely on consistency. And in both cases, small actions today can build into something much bigger over time.

Here are some lessons the climate movement can teach us about saving for retirement.

Small steps can make a big difference

Climate progress often comes from cumulative actions. Switching energy suppliers, insulating homes and reducing meat consumption may not seem significant individually. But together, they add up.

The same principle applies to your pension.

Most people build their pension gradually through:

• regular top ups;
• employer contributions; and
• making the most of tax relief.

Over time, these contributions may benefit from investment growth and compounding.

Compounding happens when your investment returns start generating returns of their own. This can help your pension grow over the long term. The earlier you start, the more time your money has to grow.

Why does long-term thinking matter?

Neither climate action nor retirement planning is about quick wins.

For example, pension contributions can initially feel like money disappearing from your payslip. Then one day, you look at your pension and see something significant taking shape - a sign that patience pays off.

Think of it like switching to solar. The upfront commitment can feel daunting, but every day it's running, it's working for you.

And just as environmental progress can take years to become visible, pension saving is a long-term journey. The goal isn’t to track every market movement or worry about every headline. It’s to make informed decisions, stay engaged with your pension and give your savings time to grow.

There's also value in 'setting and forgetting'. Switching to a renewable energy tariff is a good example. You do it once, and the benefits continue without any further thought. The same logic can apply to pensions. Whether through a workplace pension or a monthly Direct Debit to a personal pension, once your contributions are automated, they're less likely to weigh on your mind.

Your pension and the wider world

The share of major pension funds with a climate target increased from 9% in 2020 to 63% in 2024. This reflects growing recognition of the role investment capital can play in shaping the economy.

Most pension plans invest across the wider economy, which means your money could be connected to sectors such as:

• renewable energy;
• construction and infrastructure;
• retail and consumer goods;
• banking and financial services; and
• healthcare and pharmaceuticals.

Some pension providers offer plans that screen out certain industries, such as fossil fuels or weapons. Others prioritise companies with stronger environmental practices. Understanding the difference between exclusion and engagement can help you make a more informed decision.

Most providers will outline their approach in their annual statement or on their website. If you're a PensionBee customer, you can find out more about how each plan approaches sustainable investing, including voting and stewardship, on our investment philosophy page.

Why are more savers paying attention?

Net zero targets, global conflict and concerns about energy security are becoming more visible in everyday life. Climate change is also becoming more noticeable in financial markets.

The numbers suggest this shift is worth paying attention to. A survey from the Financial Conduct Authority (FCA) found 81% of UK adults want their investments to have a positive impact on society or the environment as well as provide a financial return.

Yet two-thirds of UK savers still don't know where their pension money is actually invested.

The gap between what people value and what their pension fund invests in is why more savers are starting to ask a question that rarely came up a generation ago: "What does my pension actually invest in?".

More than just your retirement

Pensions may feel personal. But their impact reaches far beyond individual retirement savings. The UK pension market holds trillions of pounds in long-term investments.

Where that money is invested can influence:

• which companies grow;
• which industries attract funding; and
• how parts of the economy develop over time.

Your pension is part of that pool - even if it rarely feels that way. 

Building for tomorrow

It's important to remember that the future isn't fixed. The choices we make today can help shape the world we live in tomorrow.

Three things you can do today

• Find out what plan you're in - many savers are automatically placed into a default fund when they join a pension scheme. That doesn't mean it's the wrong choice - but it's worth knowing what it is. Check any information from your provider, or log into your online account directly. Not sure what a default fund means? Our blog explains what it is and why it matters.
• Explore whether a different plan suits your values - some pension plans are designed to reflect certain values. PensionBee offers a range of plans, including our Climate Plan - which is built around environmental considerations including how portfolio companies approach carbon emissions. And our Shariah Plan - that only invests into Shariah-compliant companies. Find out more about our plans. 
• Run the numbers - PensionBee's Pension Calculator lets you estimate how your pot could grow based on your contributions, time horizon and assumed growth rate. It's a straightforward way to see where small changes today could take you. 

Climate change and retirement might seem like separate conversations. But for anyone saving over the next 20, 30 or 40 years, they're becoming increasingly connected.

So whether you're supporting positive change or building your retirement savings, both are reminders that long-term goals are often achieved one step at a time. 

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice

Sustainable investing approaches, including exclusion and engagement, don't guarantee better financial outcomes and may limit investment choices.