On the go: Asset manager UBS has jettisoned “unresponsive” energy companies from its suite of climate-aware funds, including one it manages on behalf of Nest.

The excluded companies include ExxonMobil, Imperial Oil, Kepco, Marathon Oil and Power Assets, and the decision follows a three-year engagement process that identified 49 oil and gas companies lagging on climate change performance.

Nest’s share ownership in the five discarded companies amounted to £40m as of July 2021, or 0.25 per cent of its total portfolio, and the companies will not be considered again for its main portfolio until they have demonstrated progress towards preparing for the “low-carbon economy”.

The government-backed master trust is introducing its own carbon-reduction target to reduce emissions by 30 per cent in public equities and fixed income by 2025, baselined against its 2019 portfolio.

Katharina Lindmeier, senior responsible investment manager at Nest, said: “COP26 showed the need for immediate action. The prospect of a 2.4C global temperature rise will cause dramatic changes to our ways of life and businesses need to be preparing now to remain profitable and successful.

“At Nest, we aim to work with companies to encourage sustainable business decisions but will draw the line somewhere. The five companies being excluded have not done enough to convince us that we should remain shareholders.

“The new short-term climate target we’re announcing today should demonstrate not only our commitment on becoming net zero, but also that we’re not hanging around. We want to be on the front foot for such an important issue like climate change to achieve better risk-adjusted returns for our members,” she added.

Francis Condon, head of thematic engagement and collaboration at UBS Asset Management, added: “We view engagement as fundamental to any sustainable investing approach. Through engagement, investors can be a force for good in influencing corporate behaviour and accelerating action in those sectors where it is most needed.

“Our three-year engagement programme provided companies with time to understand our concerns and act on them. We have seen positive progress from most companies in the programme on their climate strategy and transition to a lower-carbon economy. However, where we have not seen tangible progress, we are taking action.”

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