L&G master trust default goes green due to member demand

The provider and its independent governance committee found that 61 per cent of respondents were happy to pay more for a fund that is actively making a positive contribution to society.

However, they were not willing to compromise returns, with 65 per cent saying that they would prefer to invest in such companies but only if returns were not affected.

The 907 people surveyed were divided over whether incorporating ESG factors into fund decision making will improve long-term returns, with 37 per cent saying they thought it would improve returns, 15 per cent saying it would not and 17 per cent saying it would have no impact.

Dermot Courtier, chair of the Legal & General Mastertrust, said: “The survey shows that there is proven demand from members to invest in funds that incorporate ESG factors – it’s important that we all work together with savers and the industry alike to make a difference to society.”

The master trust and L&G’s contract-based schemes will now change their default to the L&G Future World Multi-Asset Fund, which aims to provide long-term investment growth through exposure to a diversified range of asset classes.

This in turn holds L&G Future World ESG index funds, incorporating ESG considerations via tilts to the underlying standard indices. This involves the weighting of index constituents according to their performance against ESG metrics.

Ian Pittaway, a partner at Sackers, commented: “There is no doubt that ESG is playing an increasingly important role within the pensions world. At one annual members’ meeting held by a large pension scheme I attended recently, nearly all of the questions from members concerned this topic.

“Trustees of occupational schemes are actively reviewing their policies in this area – partly driven by regulatory or legislative intervention and partly by member interest,” he added.