IN A NUTSHELL Your retirement fund doesn’t just secure your pension—it also has the power, through responsible investing, to shape a fairer, more sustainable world for you to retire into, and as a member, you have a voice in that process.
As a member of a retirement fund, you trust your fund to invest your hard-earned savings so that you receive a decent pension when you retire. But have you ever thought about what kind of world you will be retiring into? And whether your retirement savings are being used to create a better or worse future…?
From mining to maize, the industries that drive our economy have a profound impact on the world around us. Some companies burn fossil fuels, warming the planet and driving climate change. Others mistreat workers, overpay executives, pollute rivers, or destroy forests. These actions contribute to inequality, loss of biodiversity and extreme weather events. Does that sound like the kind of world you want to retire into?
What does responsible investing mean?
Globally, there is a growing move to do business better – in a way that is both profitable and sustainable. It means that companies consider the impact of how they do business on the environment and the communities around them.
Responsible (or sustainable) investing means that an investor, like a retirement fund, considers the environmental, social and governance (ESG) impact of a company and the financial returns before they decide where to invest.
What exactly is ESG?
- Environment: How do companies manage issues like pollution, carbon emissions or resource use?
- Social: How do they treat workers, customers and communities?
- Governance: Are companies run ethically, with fair pay practices and diverse boards?
For union members, responsible investing matters because it not only protects the value of pensions but also supports fair labour, stronger communities, and a healthier environment. Companies that act responsibly are less risky, since they face fewer strikes, scandals, or fines—helping keep your pensions safe.
Members’ collective power
But I’m just one person, you might say. Think of yourself as a raindrop, falling on a mountain slope. One raindrop may not seem like much – but as raindrops gather, they form a stream, then a river, and finally the sea.
Your contributions, combined with those of other retirement fund members, create a huge pool of money. Retirement funds, through their asset managers, are among the largest investors in the economy. With that power, they can:
- Invest in companies that operate sustainably.
- Hold companies accountable when they fall short.
- Engage with companies to help them become more responsible.
In this way, members’ pooled savings can help shape the kind of world you will one day retire into.
What can members do?
While trustees and asset managers make the investment decisions, members are not powerless. You have opportunities to promote responsible investing:
- Request the fund’s Investment Policy: You are entitled to ask for the fund’s policy or a summary. A responsible fund should clearly explain how it addresses ESG and sustainability. If it cannot provide this, it may be a red flag.
- Ask questions: Larger funds often hold Annual General Meetings or member feedback sessions. Use these opportunities to ask whether the fund has measured its carbon footprint, what its ESG policies are, or if it has considered reducing exposure to harmful industries.
- Elect trustees who value sustainability: Many occupational retirement funds must have at least 50% member-elected trustees. As members, you can nominate and vote for trustee candidates who take sustainability seriously. If your fund is lagging, you can campaign (within the rules) for trustees with a stronger mandate to promote responsible investment.
- Work through unions: Where funds are linked to bargaining councils, unions often nominate trustees. Members can raise ESG concerns through union structures, ensuring that workers’ voices influence fund decisions.
Retirement funds exist to provide a decent pension. But they could also shape the world we will all live in after retirement. As a member, you have the right to ensure your fund invests not only for financial returns but also for a just future.
What does the law say?
In South Africa, responsible investing is not optional – it is written into law.
- Regulation 28 of the Pension Funds Act requires trustees to consider ESG factors that could affect the long-term performance of a fund’s assets.
- The Financial Sector Conduct Authority (FSCA) Guidance Notice 1 of 2019 directs funds to include sustainability in their Investment Policy Statement (IPS).
Sources
Just Share: Finance the future you want
Old Mutual: How retirement funds can drive responsible investment
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