NOW Pensions accelerates climate action

A new investment strategy has allowed NOW Pensions to accelerate climate action.

The strategy, which was implemented in the first quarter of 2024, has enabled the master trust to make more of a real-world impact on climate, while making good progress on its commitment to reaching net-zero greenhouse gas emissions by 2050, with an interim target of a 50% reduction by 2030, based on 2019 levels.

As part of the change in investment strategy, the global equity investments are managed directly by the scheme’s in-house investment manager, Cardano Risk Management Limited.

This allows NOW Pensions to have direct engagement and influence on its company holdings and can support these companies in their transitions to net-zero or if there is no credible transition plan, choose to disinvest.

According to the announcement on Monday, NOW Pension’s new narrative-based scenario analysis, as outlined in its Task Force on Climate-related Financial Disclosures (TCFD) report, reinforces that a 3°C or higher warming scenario would be catastrophic for most investment portfolios as the systematic economic consequences would likely be dire.

It strengthens NOW Pensions’ commitment to steward its company holdings in a way that will contribute to limiting the warming to 1.5 - 2°C by 2050.

Martyn James, director of Investment at NOW Pensions, said: “Earlier this year we took the decision to implement a new investment strategy to our portfolio. This was set, not only with the ambition of improving performance and value for money for our members, but to also comprehensively improve our sustainable approach to investment. This new approach is strongly linked to our conviction and the principles of our Trustees, to deliver a scheme that puts sustainability at the heart of its investment approach.

“We are proud of the progress that we have made in this last year, with the number of our investments backed by a recognised science-based target increasing, while the carbon emissions per million invested has significantly decreased. These developments put us well on our way to achieving our objectives of a 50% reduction in carbon emissions by 2030, based on 2019 levels.”

Overall, around 60% of NOW Pensions’ diversified growth fund is now invested in an equity strategy that seeks to support the transition, around 11% is in sustainable and green bonds and around four percent is in a corporate credit strategy that seeks to support the transition.

Consequently, 100% of its physical global equity company holdings and 76% of total holdings directly link to the trustee’s responsible investment objectives.