Millions of pension pots forced into ‘dirty stocks’

You may want to invest ethically but if you save in a workplace pension your portfolio probably includes BP and Shell, writes Sam Meadows

The pension savings of millions of workers have been invested in fossil fuel companies via workplace schemes, despite pension firms claiming they account for environmental factors before choosing investments.

This comes amid a growing desire among investors to support “ethical” businesses and government pressure for providers to be conscious of how they invest people’s money.

Money paid into “default” pension funds offered by the biggest providers has been funnelled into oil companies, such as BP and Royal Dutch Shell, and mining firm Rio Tinto.

More than 10 million people have started saving via a workplace pension under auto-enrolment – a policy whereby employers have to pay into a pension for workers. While this has successfully led to millions saving for their retirement, few are engaged with their pension fund.

More than 97pc never switch out of the “default fund”, meaning their investments may fall short of ethical standards.

Telegraph Money’s analysis of the 10 biggest pension providers’ default funds found that money had been sleepwalking into stocks that were negatively affecting the climate. Only one, Nest, had no fossil-fuel producing firms among its largest investments. Eight others owned BP and Royal Dutch Shell while Now Pensions had exposure to the FTSE 100, which would include those stocks.

Other providers held investments in controversial businesses such as Nestlé, under fire for its working practices, and Facebook, which has been criticised for abusing personal data.