Ethical Investing and Your Pension: A UK Guide for 2026
If you have a workplace pension in the UK, your money is almost certainly invested in Shell, BP, HSBC, and BAE Systems. You probably did not choose this. Under auto-enrolment, your employer's pension provider selected a default fund on your behalf, and unless you have actively changed it, that is where your contributions go.
Shell reported 1.2 billion metric tons of CO2 equivalent in total emissions in 2024. HSBC held $3.5 billion in financial involvements with nuclear weapons companies between 2022 and 2024. BAE Systems derives 96% of its revenue from defence and has confirmed arms deals in 81 countries.
The average UK worker will accumulate over 300,000 pounds in pension savings across their career. This guide explains how the system works, what the default funds actually hold, and what the independent evidence shows about those holdings. For a broader look at aligning investments with personal values, see our guide on how to check if your investments align with your values.
Is Your UK Pension Invested Ethically?
Most UK workers have never checked. Since auto-enrolment became mandatory in 2012, every UK employer must enrol eligible staff into a pension scheme. Your contributions, along with employer and government top-ups, go into a default fund -- chosen by your employer's pension provider, not by you.
Here is the critical detail that most people miss: the default fund is typically a diversified portfolio heavily weighted toward FTSE 100 and global equities. That means your pension likely holds oil and gas majors, defence contractors, and banks with documented links to the arms industry. Unless you have actively changed your fund selection, this is where your retirement savings sit.
The three main pension types and your level of control:
Workplace pensions -- the most common. You have limited control unless you opt into a self-select option, which most providers offer but few employees know about.
Self-Invested Personal Pensions (SIPPs) -- full control. You choose exactly which funds, stocks, or bonds to hold. Providers like Hargreaves Lansdown, AJ Bell, and Interactive Investor all offer SIPPs with access to ethical fund ranges.
Small Self-Administered Schemes (SSAS) -- for company directors. Maximum flexibility, including commercial property, but relevant only to business owners.
What Default Pension Funds Actually Hold
The FTSE 100 is the backbone of most UK pension portfolios. Even global tracker funds carry significant FTSE 100 exposure. The index is dominated by a handful of sectors: oil and gas, banking, mining, pharmaceuticals, and defence.
The ten largest FTSE 100 companies by market capitalisation typically include Shell, AstraZeneca, HSBC, Unilever, BP, Rio Tinto, BAE Systems, Diageo, and GSK. These names appear in virtually every UK default pension fund.
How Your Pension Holdings Score on Integrity
Mashinii scores over 6,000 public companies across 11 ethical dimensions using enforcement records, court settlements, and independent investigations. Here is what the data shows for nine major FTSE 100 pension holdings.
| Company | Planet-Friendly Business | Honest & Fair Business | Fair Pay & Worker Respect | No War, No Weapons | Kind to Animals | Better Health for All |
|---|---|---|---|---|---|---|
| Shell | -50 | -20 | 0 | -40 | 0 | -80 |
| BP | -50 | -60 | -20 | 0 | -70 | -80 |
| HSBC | -40 | -20 | +10 | -80 | -20 | 0 |
| Rio Tinto | -60 | 0 | -10 | -50 | 0 | -10 |
| BAE Systems | 0 | 0 | -20 | -80 | 0 | -30 |
| Unilever | -40 | 0 | +60 | -40 | -20 | -10 |
| AstraZeneca | -30 | 0 | 0 | +20 | -40 | +20 |
| Diageo | -30 | 0 | +10 | -10 | +10 | -30 |
| GSK | -30 | -40 | 0 | +10 | 0 | 0 |
Scores from -100 to +100. Bold indicates notably low or high scores.
Oil, Mining, and Defence: The Hidden Holdings in UK Pensions
Shell's total Scope 1, 2, and 3 emissions included 50 million tons from Scope 1, 8 million from Scope 2, and 1.1 billion from Scope 3 in 2024, according to the company's own reporting. The Health and Safety Executive officially censured Shell 25 times for breaking safety rules in the past six years and prosecuted the company four times since 2005 for incidents including an explosion and a fatality. Shell scores -80 on Better Health for All.
BP's aggregate lifecycle emissions were 644 million tCO2e in 2024. In 2024 alone, BP reported 1 fatality, 4 life-changing injuries, 3 Tier 1 and 35 Tier 2 process safety events, and 96 oil spills. The Deepwater Horizon disaster resulted in the estimated deaths of 600,000 to 800,000 coastal birds, 200,000 offshore birds, and 167,000 sea turtles. BP scores -70 on Kind to Animals and -80 on health, reflecting the ongoing consequences of its operational record.
BP also scores -60 on Honest & Fair Business. The company incurred approximately $29.1 million in ethics-related fines over 2022-2024, and a past whistleblowing case (BP v Elstone) resulted in a dismissal deemed automatically unfair, raising questions about the practical effectiveness of internal reporting channels.
View Shell's full score breakdown | View BP's full score breakdown
Banking: HSBC's $3.5 Billion in Nuclear Weapons Links
HSBC scores -80 on the No War, No Weapons dimension. Between January 2022 and August 2024, the bank held approximately $3.5 billion in financial involvements with companies in the nuclear weapons industry. Public records also show ongoing links to controversial weapons, including holdings in manufacturers of cluster munitions and depleted uranium.
HSBC's publicly stated policy since 2000 to avoid financing weapons manufacturers defines weapons companies restrictively and includes caveats to honour existing commitments. Independent analysis shows no significant downward trend in its lending to the arms sector since that policy was announced. The bank also provided financial services to a Libyan engineer with ties to Muammar Gadhafi for alleged arms imports and maintained accounts for clients linked to arms trafficking in African countries in 2006-2007.
On corporate integrity, HSBC received a $1.9 billion fine from the U.S. Department of Justice for facilitating money laundering transactions. In 2024, 1,527 concerns were raised through its HSBC Confidential whistleblowing channel, with a 35% substantiation rate. For a deeper comparison of UK banking ethics, see our HSBC vs Barclays ethics comparison.
View HSBC's full score breakdown
Defence: BAE Systems at 96% Defence Revenue
BAE Systems derives 96% of its revenue from defence. It is the UK's largest defence company and the third largest arms firm globally. It has sold at least 15 billion pounds in arms and services to the Saudi military since 2015 and has confirmed arms deals in at least 81 countries. The company produces white phosphorus gas shells.
In 2010, BAE was fined 500,000 pounds for routing payments via a hidden subsidiary. A 2006 UK government investigation into alleged bribes totalling up to 6 billion pounds in the Al Yamamah arms deal was shut down. The company also agreed to pay up to $79 million in U.S. government fines for over 2,500 alleged breaches of military export rules.
BAE scores -80 on No War, No Weapons, -30 on Safe & Smart Tech, and -30 on health.
View BAE Systems' full score breakdown
Consumer Goods: Where the Data Diverges
Unilever scores +60 on Fair Pay & Worker Respect. All individuals working directly for Unilever have earned a living wage since 2020, and the company was accredited as a global living wage employer in February 2022. Its 2024 UK gender pay report showed a 4.8% median pay gap in favour of women. However, Unilever was labelled an "international sponsor of war" by the Ukrainian government in July 2023 for continued operations in Russia, paying 3.8 billion roubles in tax to the Russian state in 2022 and committing to comply with Russian conscription laws. It scores -40 on No War, No Weapons.
Diageo has relatively moderate scores across dimensions. At +10 on worker respect, the company demonstrates certified living wage practices. Its -30 on climate reflects emissions typical of the beverages sector. Diageo scores +10 on Kind to Animals.
View Unilever's full score breakdown | View Diageo's full score breakdown
Pharma: Divergent Integrity Profiles
AstraZeneca scores +20 on Better Health for All, reflecting $4.6 billion in patient assistance programmes reaching over 134 million patient lives annually. The company does not file patents in low-income or least developed countries and offers royalty-free licensing for neglected tropical diseases. It reported zero material cybersecurity or personal data breaches in 2024 and achieved a 77.5% reduction in Scope 1 and 2 greenhouse gas emissions since 2015.
However, AstraZeneca scores -40 on Safe & Smart Tech due to an ongoing police investigation in China for possible breaches of data privacy laws and a 2021 incident where sensitive patient data and credentials were exposed on GitHub for over a year.
GSK scores -40 on Honest & Fair Business, driven by a $2.2 billion Zantac settlement and multiple fines for misleading marketing. GSK scores +10 on No War, No Weapons, with no identified involvement in arms manufacturing.
View AstraZeneca's full score breakdown | View GSK's full score breakdown
Mining: Rio Tinto's Juukan Gorge Record
Rio Tinto scores -60 on Planet-Friendly Business, with total Scope 1, 2, and 3 emissions of 605.3 million tonnes of CO2 equivalent in 2024. In 2023, the company recorded 8 environmental compliance violations, including water pollution, resulting in a $2 million fine.
Rio Tinto recorded 22 substantiated labour-law or workplace safety violations between 2023 and 2025, including a $798,867 fine from WorkSafeBC for a repeated, high-risk safety violation at its Kitimat smelter. The Juukan Gorge destruction in May 2020 -- the demolition of Aboriginal rock shelters of immense cultural significance -- remains a defining event. A class action lawsuit in Papua New Guinea and a letter of claim in Madagascar indicate ongoing community impact. Rio Tinto scores 0 on Respect for Cultures & Communities, reflecting both the documented harm and subsequent remediation efforts.
View Rio Tinto's full score breakdown
The UK Regulatory Landscape
The FCA Sustainability Disclosure Requirements (SDR), introduced in late 2024, created a labelling regime for sustainable investment products. Funds must now meet specific criteria to use labels like "Sustainability Focus" or "Sustainability Impact." This applies to funds, not to the underlying companies. A fund can hold Shell and still qualify under certain labels if it can demonstrate an engagement strategy.
The UK Stewardship Code 2020, administered by the Financial Reporting Council, sets expectations for how asset owners and managers exercise stewardship. Over 270 organisations are current signatories. The code is voluntary.
The Pension Schemes Act 2021 requires trustees of large pension schemes to assess and report on climate-related risks in line with TCFD recommendations. Your pension trustee is legally required to consider climate risk. This does not require divestment from fossil fuels.
How to Check Your Pension's Ethical Exposure
1. Find your pension provider. Check your payslip or ask your HR department. Common UK workplace pension providers include Aviva, Legal & General, Scottish Widows, Nest, and The People's Pension.
2. Log into your pension account. Every provider has an online portal. Find the section showing your current fund selection.
3. Identify your fund. You are looking for the name of the fund or funds your contributions go into. It will be something like "L&G Multi-Asset Fund" or "Aviva My Future Focus Growth."
4. Look up the fund's top holdings. Most providers publish factsheets for each fund. These list the top 10 holdings and sector allocations. If your provider does not publish this, request it. They are legally required to provide it.
5. Search each holding on Mashinii. Go to the company search page and look up each company. Read the score explanations. The evidence is cited and sourced.
6. Decide what matters to you. Not everyone draws the line at the same place. Some investors focus on weapons. Others prioritise climate. Mashinii scores across 11 dimensions precisely because values are personal.
Questions to Ask Your Pension Provider
Most pension providers have a contact form, email address, or secure message function within your online account. Here are four specific questions you can send:
1. "What percentage of the default fund is invested in fossil fuel companies (oil, gas, and coal producers)?" The answer should be a number. If they cannot provide one, that itself is informative.
2. "Does the default fund hold any companies involved in arms manufacturing, cluster munitions, or nuclear weapons?" Under FCA rules, your provider must be able to tell you this. BAE Systems and companies like it appear in most FTSE 100 trackers.
3. "What ethical or sustainable fund alternatives are available, and what is the cost difference?" Most providers offer at least one alternative. Switching is usually free. If there is a fee difference, it is typically small (0.1-0.2% per annum).
4. "Has the fund's trustee published a statement on responsible investment or stewardship, and where can I read it?" Under the Pension Schemes Act 2021, large schemes must report on climate-related risks. This question establishes whether your scheme takes stewardship seriously.
You do not need to be a financial expert to ask these questions. You are the beneficiary. It is your money.
What You Can Do About It
If you are in a workplace pension, most providers offer an ethical or sustainable fund alongside the default. Switching is typically free and can be done online. Ask your employer if they offer a self-select option.
If you want full control, consider opening a SIPP. You can transfer existing pension pots and choose exactly which funds or stocks to hold. Look for funds that screen out fossil fuels, weapons, tobacco, and gambling, or build a portfolio of companies that score well on the dimensions you care about.
For financial advisers, the FCA's Consumer Duty (effective July 2023) requires firms to deliver good outcomes. For clients who have expressed ethical preferences, holding companies with documented integrity issues may raise suitability concerns. See the advisor solution.
How We Score
Every score in this article is derived from enforcement records, court settlements, and independent investigations. No corporate self-assessments. Learn more about our methodology.
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Mashinii provides integrity data for informational purposes. This content does not constitute financial advice. Pension decisions should account for your individual circumstances, risk tolerance, and time horizon. Consult a regulated financial adviser before making changes to your pension arrangements.