Pension schemes urged to be transparent about whether they’re making ‘socially responsible’ investments

Savers will be able to easily check whether their pension is being invested in ethical or environmentally friendly investments in new measures outlined by the government today.

Regulations expected to be brought in this week will require trustees of schemes to disclose where people's savings are going.

Pension scheme members will be able to see whether investments take into mind environmental concerns, and can make their own judgement on risk posed to their investment by poor corporate governance or socially harmful practices.

A study from Morgan Stanley last year showed millennials are particularly concerned with how their money is being used, as 87 per cent said they were interested in socially responsible investing.

"Young people have grown up using the internet to check holiday reviews, restaurant reviews, and quality ratings on all types of products, and they’re wanting to do the same with their pension investments by checking the ethical credentials of who they buy from," said work and pensions secretary Esther McVey.

"Such savvy shoppers put power back in the hands of individuals, so they can make informed choices about whether to make a purchase or use a service – or challenge the status quo.

"In the same way, we’re looking at ensuring people have access to information about the nature and sustainability of investments to create a win-win situation for those investing their hard-earned money in a pension fund, as well as expanding the choices on offer."

The changes will not take away power from trustees to decide on a scheme's investment strategy. However, if they disregard long-term financial risks from factors like the environment, they will need to justify why this won't harm returns for members.

Earlier this year, the Environmental Audit Committee warned that a minority of large pension funds were still not taking risks caused by climate change into account in their decision making.