Shaping a sustainable future - green occupational pension strategies

Sustainability in occupational pension schemes encompasses far more than ecological responsibility - it stands for good corporate governance, social responsibility and employee development. But what does sustainability in occupational pension schemes mean in concrete terms, especially for insurers and pension providers? And how can IT contribute to achieving their sustainability goals? Answers to these questions and more in my blog post.

The importance of sustainability in occupational pension schemes

Due to demographic change and a growing awareness of sustainability, companies are increasingly endeavouring to make their occupational pension schemes sustainable. Sustainability encompasses not only ecological responsibility, but also good corporate governance, social responsibility and employee development. It therefore includes the social and ethical dimension of corporate management. This comprehensive view is often summarised under the abbreviation ESG (Environmental, Social, Governance) and serves as the basis for sustainability strategies.

The United Nations has defined 17 sustainability goals, which came into force on 1 January 2016. In addition, a total of 195 countries committed to pursuing these goals in the Paris Climate Agreement of 12 December 2015. A key objective is to make Europe the first climate-neutral continent by 2050. All political decisions must be geared towards achieving this goal. Sustainability is therefore not a passing trend, but a long-term commitment that is also becoming increasingly important in occupational pension schemes.

Sustainable investments in occupational pension schemes

Climate change, social inequality and ethical issues are increasingly influencing the investment decisions of companies and investors worldwide. Studies show that investors are prepared to forego returns if their investments make a positive contribution to the environment and society. These trends are also reflected in occupational pension schemes. For example, insurers are increasingly investing in sustainable projects such as wind turbines or solar parks and aligning their investments with sustainability criteria. Equity funds in particular offer the opportunity to invest pension contributions according to ecological and ethical criteria. Investments can be excluded by negative criteria, for example in companies involved in coal, armaments, oil or nuclear power. Fixed-interest securities such as government bonds can also be selected on a sustainable basis. However, long-term bonds in the cover pool cannot simply be sold due to their maturity, and the market does not offer enough green bonds.

Sustainability in sales

Sales play a decisive role in the implementation of sustainable occupational pension strategies. From 2 August 2022, advisors will be obliged to ask their customers about their sustainability preferences when providing investment advice. In principle, they may only recommend products that meet the sustainability preferences of their clients. The sustainability preferences supplement the investment objectives "investment purpose", "investment duration" and "risk appetite", which customers already had to be asked about.

This regulation is only mandatory for insurance investment products. However, its application in the context of occupational pension schemes is not explicitly excluded, especially as the German Insurance Contract Act (VVG) also requires occupational pension schemes to ask policyholders about their wishes and needs and to advise them. Some insurance brokers have recognised the market potential and attach great importance to sustainability themselves. They have specialised in exclusively brokering sustainable products, even though demand exceeds the current market supply.

Sustainable IT and digital administration

A sustainable IT infrastructure aims to minimise energy consumption and use resources efficiently. An important aspect of this is the optimisation of hardware utilisation: load peaks can be absorbed through sensible scaling and unnecessary energy consumption can be avoided. Mainframes, servers, monitors and digital work equipment for employees can be procured and operated in an energy-saving and environmentally friendly manner. The energy efficiency of German insurers' data centres is in line with the national average, which shows that there is still room for improvement. In addition, the longevity of the hardware used plays an important role, as long-lasting devices need to be replaced less frequently, thus conserving resources.

Digital administrative processes make a significant contribution to achieving sustainability goals. Even seemingly small measures such as replacing paper Christmas cards with electronic alternatives and a simple note in emails that the recipient should not print the message for sustainability reasons can make a difference. Promotional material can also be made available in digital form instead of paper. The introduction of digital files instead of paper files and the optimisation of processes, e.g. to avoid sending multiple letters, are further steps towards sustainability.

The use of portal solutions and the use of BiPRO standards support this development, particularly in the area of company pension schemes. Automated dark processing, in which processes such as the administration of occupational pension contracts and benefit statements run without human intervention, saves additional resources and increases the efficiency of occupational pension administration. For example, employees joining and leaving the company, changes to contributions or pension statements can be carried out more quickly and without errors. Overall, the electronic transmission and administration of documents leads to time and resource savings, increases customer satisfaction and strengthens customer loyalty. This in turn can increase cross-selling potential.

With these measures, companies not only make a contribution to environmental protection, but also optimise their internal processes and strengthen their market position. A sustainable IT infrastructure and efficient digital administrative processes are therefore not only ecologically sensible, but also lead to a clear competitive advantage.

Conclusion

Sustainability is not a passing fad, but a long-term commitment that is also becoming increasingly important in occupational pension schemes. Insurance companies and pension providers are increasingly endeavouring to make their corporate management and occupational pension products sustainable. Sustainability targets are now even part of the bonus systems for board members in some cases. Customers' sustainability preferences are also becoming more important in sales, which emphasises the relevance of an integrated approach to occupational pension advice.

A green IT strategy plays a central role in this, focussing on a sustainable IT infrastructure and efficient digital administrative processes, for example. These measures reduce the consumption of resources, optimise internal processes and significantly strengthen the market position of companies. Overall, they make a valuable contribution to environmental protection and give companies a clear competitive advantage.

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