The People’s Pension newly invests in fund combining ESG and factors to reduce fossil fuel exposure

The People’s Pension1, a leading not-for-profit master trust in the UK, has this week invested in the State Street2 ACS Multi-Factor Global ESG Equity Index Fund, in order to reduce exposure to ESG factors including fossil fuels, as part of its wider work on responsible investment.

The fund, which targets the MSCI3 World Select 5-Factor ESG Low Carbon Target, has a blend of smart beta factors and ESG characteristics. It targets five well-established equity factors, improved ESG scores and a reduction in carbon emissions and reserves intensity.

Commenting, Nico Aspinall, Chief Investment Officer at B&CE, provider of The People’s Pension, said:

“Factors offer a different way of constructing portfolios for members and we expect it will reduce the risk of our holdings overall whilst achieving their targets. We also recognise the importance of ESG as a financial factor and the screen we apply keeps the worst companies out of the portfolio, reducing fossil fuel exposures as a result.”

Guido Giese, Executive Director of MSCI, added:

“Institutional investors are increasingly seeking to incorporate ESG considerations into factors. This Index aims to incorporate ESG-based and carbon-based constraints in a bottom-up index construction approach.”

Daniel Leuty, UK Head of DC Clients and Financial Institutions at State Street, said:

“The launch of the State Street ACS Multi-Factor Global ESG Equity Index Fund continues to build on our belief and commitment to ESG and factor investing and delivering these capabilities to our clients and the wider market.  State Street and The People’s Pension are fully aligned in the belief that climate change presents material, uncompensated risks to long-term investors, and this strategy was designed to protect and benefit the portfolio over the long-term.”