The People’s Pension1, the leading workplace pension scheme, has today announced the move of £15 billion of its assets under management into climate aware investment strategies – the biggest single move of its kind by a UK master trust.
This means 70% of the Scheme’s main investment fund2 will be aligned to the Paris Agreement goal of keeping warming below 1.5°C3.
The change means the carbon footprint of the investments for the majority of its 6.5 million members has reduced by 30 per cent. This change also results in divestment from companies that produce thermal coal within the assets covered by this new strategy.
The new investment approach4 is designed to adjust the level of investment in companies based upon their exposure to climate risks and opportunities, and tracks regional indices, which aim to exceed the minimum standards of the European Union’s Climate Transition Benchmark5. This means it will have at least a 30 per cent reduction in emissions initially and will further reduce by 7 per cent each year, to be aligned with the target of reaching Net Zero by 2050.
The primary aim of the change is to manage the long-term risks posed to members’ investments by climate change and a green transition, that aren’t currently being priced by the market.
It also means that members can be confident their investments are working toward the goals of the Paris Agreement.
Commenting, Dan Mikulskis, the Chief Investment Officer for People’s Partnership, provider of The People’s Pension, said: “We believe the changes we have announced mean that The People’s Pension is now one of the greenest master trusts in the UK, which is great news for our members. Asset owners like us are uniquely positioned to use our size and influence to ensure our members’ savings are allocated and managed responsibly, and that the companies in which we invest are acting in responsible and sustainable ways.
“Key to our investment philosophy is conviction in what we do – if we really believe in something we want to make it core to our members’ retirement savings, rather than a tick to a box, and that’s what we’ve done here.”
The new investment strategy is designed to deliver even better investment returns for savers.
Commenting, Mark Condron, Chair of The People’s Pension Trustee, said:
“This is a hugely significant moment for The People’s Pension and its 6.5 million members as it reinforces our commitment to tackling climate change through investing.
“Our members can be confident their savings are working towards achieving Net Zero targets and not against it.”
ENDS
Notes to editor:
- People’s Partnership provides The People’s Pension, the largest independent master trust in the UK in terms of members, serving more than 6.5 million pension savers across the UK and manages £25bn in assets. As a business without shareholders, it reinvests its profits with the aim to help customers and achieve better financial outcomes for everyone
- This relates to The People’s Pension’s Global Investments (up to 85% shares) Fund, which is the accumulation fund of the default arrangement.
- parisagreement_publication.pdf (unfccc.int)
- The MSCI Climate Change Indexes consider both the opportunities and risks associated with transition to a low carbon economy, enabling institutional investors and wealth managers to integrate climate risk considerations in their global equity investment process. The indexes are designed to exceed the minimum requirements of the EU Climate Transition Benchmark minimum requirements.
- https://finance.ec.europa.eu/regulation-and-supervision/financial-services-legislation/implementing-and-delegated-acts/eu-climate-transition-benchmarks-regulation_en