On the go: Now Pensions has pledged to go net-zero by 2050, while also increasing its investments in sustainable assets.
The UK multi-employer pension fund, with £2.5bn in assets under management, is expanding its approach to sustainable investing by committing to net-zero carbon emissions by 2050 with the interim target of a 50 per cent emissions reduction by 2030.
Now Pensions will also expand its investments in sustainable bonds and equities to at least 50 per cent of total net assets by the end of 2021.
The allocation to green and social bonds will be increased and the pensions provider will invest in a low-carbon environmental, social and governance equity portfolio, which allocates to companies that have stronger sustainability characteristics and lower carbon footprints.
This is consistent with Now Pensions’ commitment to invest in line with the Paris climate agreement to limit warming to 1.5C above pre-industrial levels.
The trustee, along with its investment manager Cardano, is also exploring an additional innovative sustainability mandate, which has a greater focus on environmental and social solutions that will deliver its higher return objective.
These changes come as a result of the trustee’s ‘root-and-branch’ review of its investment strategy and to ensure that ESG issues are integrated into all of Now Pensions’ investments.
The enhanced focus on sustainability reflects the trustee view that, as long-term investors, incorporating ESG issues into a responsible investment process is integral to long-term success.
Joanne Segars, chair of the trustee, said: “The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment.”
She added: “We believe the focus on ESG supports better long-term financial outcomes for our members in later life.”
Chief executive Patrick Luthi commented: “Now Pensions strives to invest sustainably and we continue to monitor ways to be more effective and operate in a way that has a positive effect on our employees, our industry and our society. These changes put sustainability firmly at the heart of our investment strategy.”
Now Pensions offers a single investment plan made up of the Diversified Growth Fund, which targets stable long-term growth for scheme members during the majority of their working lives, and the Retirement Countdown Fund, which is designed to reduce the risk of built-up pension savings falling in value before they are turned into retirement benefits.
As a result of the investment review, the glide path will be extended to 15 years from 10 years, during which time members approaching retirement will be switched to the Retirement Countdown Fund. The move ensures that members approaching retirement are protected from major market movements.
The return objective for the Diversified Growth Fund will also be increased to secure improved member outcomes.
Segars noted: “Our investment approach – centred around a single default fund – is focused around the needs of our members, providing returns to deliver good member outcomes, while also providing protection from market volatility as they approach retirement.”
This article originally appeared on MandateWire.com
