Climate action

Scottish Widows sees net zero boost to pensions

Scottish Widows head office
Scottish Widows: revised asset allocation

Scottish Widows believes the move to a net zero investment strategy will offer longer-term growth for customers’ pension savings.

The Edinburgh-based business has launched its climate action plan and said it aims to achieve a net zero portfolio by 2050.

It claims to be the first major pensions and insurance provider to clearly outline its decarbonisation targets.

The plan includes an investment of £20bn to £25bn into climate-aware investment strategies and climate solutions investments by 2025.

Of this, £1bn will be specifically invested in climate solutions. That includes renewable energies, low carbon buildings, and energy efficient technologies.

Scottish Widows, part of the Lloyds Banking Group, will ensure that its asset allocation decisions are focused around climate impacts. This will see the company exclude high carbon investments. It will focus stewardship activity on businesses failing to address climate change risks.

Scottish Widows head of pension investments and responsible investments Maria Nazarova-Doyle said: “We believe the move to net zero will offer longer-term sustainable growth for our customers’ pension savings by leveraging low-carbon transition opportunities among some of the world’s most forward-looking companies.

“The pensions industry has a responsibility to act as a responsible steward for the success of climate solutions – and to exclude investments in high-carbon companies which are resistant to change.

“We look forward to other providers joining us and helping set out how the UK pensions industry will achieve large-scale net zero commitments, setting a clear expectation for high-carbon sectors resistant to change.

“Together, we can safeguard the future of our customers’ pension savings – and our planet.”

Scottish Widows has made an additional £3bn investment in Blackrock’s Climate Transition World Equity fund. It builds on an existing £2bn allocation, bringing the total Scottish Widows investment in this fund to £5bn.

Shortage of ESG candidates

Scotland is missing an opportunity to become a leader in the rapidly growing field of ethical investment due to an unprepared workforce and a lack of clarity around regulation, according to a recruitment specialist.

Betsy Williamson, managing director of Edinburgh-based Core-Asset Consulting, said there is a mis-match between company ambitions to be socially responsible investors and the availability of candidates to fulfil these roles.

The number of job listings for ESG (environmental social governance) analysts in Scotland has increased by 70% over the last two years.

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Ms Williamson said: “ESG and SRI have gone from being fringe topics to front and centre in everyday life. Nearly every big business has an ESG strategy and the major investment firms are advertising SRI portfolios across mainstream media.

“Yet there is a shortage of candidates coming through to meet the demand for ESG-related roles. We need academic institutions in Scotland to catch up with trends. Those in and around the sector must be encouraged to up-skill.”

Her comments came ahead of publication of Core-Asset’s eighth annual “Industry Trends and Salary Guide” report – which features environmental and social governance throughout.

Jamie Mariani, Portfolio Manager with Trillium Asset Management adds: “The Scottish Government could play a more active role in helping to frame definitions and standards specifically for those working Scotland.

“Such a framework would not need to carry legal force but could be a set of principles that investors sign up to and uphold. Institutional investors and individual investors need help to separate the wheat from the chaff and this could help them in making more informed decisions.”

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