The Experiment Societyexperimentsociety.org⌕Get involved
Energy & EnvironmentDefaultPositive

Green Investment Default in Retirement Plans

Nest (UK National Employment Savings Trust) · United Kingdom · 2020

Summary

Nest's change of the default investment option for 10 million UK workers to a responsible investment fund is perhaps the largest-scale application of default theory ever implemented. Nearly all enrolled workers remained in the default. The opt-out rate was below 2%. Returns were comparable to the prior balanced default. The experiment demonstrates that default choice architecture can redirect enormous capital flows at near-zero cost — and that stated preferences for sustainability expressed in surveys are not needed to produce sustainable investment behavior when defaults do the work.

Research question

"Does making a responsible investment fund the default option increase sustainable investment allocation without reducing returns?"

Methodology

Intervention

Nest changed default fund allocation for 10 million enrolled workers from balanced fund to responsible investment fund; opt-out available

Assignment

Pre-post with administrative data; near-universal take-up of default

Sample size

10 million enrolled workers

Primary outcome

Allocation to responsible investment; opt-out rate; fund performance

Effect estimate

95%+ of enrolled workers now in responsible investment default; opt-out rate <2%; comparable returns

Decision

Default maintained; UK government explored similar requirements for other pension providers

Result

Positive

95%+ of enrolled workers now in responsible investment default; opt-out rate <2%; comparable returns

Evidence strength

Limited

Observational or pre-post design; correlation not necessarily causal.

Replication status

Open for replication

Institution

Nest (UK National Employment Savings Trust)

Location

United Kingdom

Year

2020

Policy area

Energy & Environment

Mechanism

Default

Other trials of this mechanism

Cite this entry

Nest (UK National Employment Savings Trust). (2020). Green Investment Default in Retirement Plans. The Experiment Society Registry. Retrieved from https://www.experimentsociety.org/registry/green-defaults-retirement (primary report: https://www.nestpensions.org.uk/schemeweb/nest/nestcorporate/strategy-and-policy.html)

Related experiments

Germany · 2016

Green Electricity Opt-Out Default

Positive

New York City, USA · 2021

Ranked Choice Voting — New York City 2021 Mayoral Primary

Mixed

Chicago, IL, United States · 2018

Inclusionary Zoning Affordability Audit

Positive

Open for replication

Could your jurisdiction test this?

This finding has not yet been independently replicated. A replication in a new context — a different city, country, or population — is one of the highest-value contributions to the evidence base. If your team could host a replication, we can help with study design, sample-size estimation, and analysis.

Propose a replication →What does "open for replication" mean?
← Back to registryWhat the evidence shows →