Scottish Widows launches ESG pension funds

The funds will focus on clean industries (pic: Transport Scotland)

Scottish Widows has launched four funds that aim to drive pension investment into environmentally friendly companies.

A new Global Environmental Solutions Fund is focused on directing pension investment into companies that provide solutions to critical environmental issues, such as global greenhouse gas emissions, food security, pollution and biodiversity loss.

Developed with fund manager Schroders, the fund invests in companies that derive at least 50% of their revenues from goods and services that facilitate sustainable alternatives in transport, electricity and heat production, water use, agriculture, or industrial manufacturing.

Companies that direct at least 20% of capital expenditure to the adaptation of their businesses or products and services to the circular economy are also eligible. As are companies that, in Schroders’ opinion, exert significant influence through their policies and practices over their supply chains or customers to reduce emissions.

Scottish Widows has also launched three regional equities funds, managed by BlackRock and Abrdn, which track decarbonising benchmarks.

They will aid Scottish Widows’ targets to halve the carbon footprint of all its investments by 2030 on its path to net zero emissions by 2050.

The funds are aligned with the decarbonisation objectives of the 2015 Paris Agreement and will be used as building block components for over 80 Scottish Widows multi-asset funds.

Two of the funds track Paris-aligned indices which facilitate an immediate 50% reduction in carbon intensity, followed by an ongoing 7% reduction year-on-year. The UK fund tracks a Climate Transition index which also facilitates a 7% a year ongoing decrease, from an initial 30% reduction.

Scottish Widows head of responsible investments and stewardship Maria Nazarova-Doyle said: “We recently called for the industry and government to tackle environmental crisis and nature degradation together through joined up, focused action.

“With the launch of our new fund, we’re taking steps ourselves towards driving major investment into better outcomes for the environment as well as our customers.

“We have an urgent imperative to support the companies attempting to drive the change our planet desperately needs, while protecting the savings and livelihoods of our members in the long run. More innovative solutions are on the horizon, but we must work together to ensure they become a reality.”

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