Collaboration is key for creating a sustainable future for pensions

Two children run holding hands with a wind farm in the background

Earlier this month, the government responded to their consultation: Climate and investment reporting: setting expectations and empowering savers. We welcome the response, as having clear regulations around this topic is another step towards the pensions industry’s shared goal to offer sustainable pensions to savers.

It follows on from an event we hosted at the Cardano and NOW: Pensions offices in May where we welcomed Guy Opperman, the Minister for Pensions and Financial Inclusion, to discuss the changes we’re making to create a sustainable pensions industry. Watch the highlights from the event.

We were also lucky to have Laura Ornelas from UNPRI in attendance to discuss a range of sustainability topics, from net zero as an imperative to regulation – in particular the Task Force on Climate-Related Financial Disclosures (TCFD) being used as foundations for transition – and the importance of stewardship as a lever for change.

The core principles driving our sustainability focus

Sustainability has always been at the core of both the Cardano and NOW: Pensions’ culture and how we run our business. We are sustainable investors, quite simply because it is the right thing to do. We believe our clients, our members and their dependents should enjoy a quality of life similar to, or even better than, what’s possible at present. This means building a sustainable and less-polluted environment within a fairer society where everyone can enjoy financial security in their later life.

Consistent with the objective of providing members with a pension, they should also be able to enjoy that pension. That’s why we want to make sure that we’re offering a sustainable pension to our members and to do that we commit, collaborate, engage and invest in order to reach our sustainability goals:

  • We measure and aim to reduce our own operational emissions. Those emissions we cannot eliminate completely we offset on an annual basis.
  • Our portfolios are committed to Net zero greenhouse gas emissions by 2050, with 50% emissions reduction by 2030 based on 2019 levels, consistent with the Paris Climate Agreement goals of limiting global warming to 1.5°C, compared to pre-industrial levels.
  • We do not intend to use of carbon offsets in the portfolio to meet this objective.
  • We collaborate – with our peers, stakeholders, clients and policymakers. We learn from others, and we contribute our expertise where we can.
  • We engage – Cardano is a signatory to the UK stewardship code – one of the first fiduciary managers to do so.
  • Then of course we invest – in green, social and sustainable bonds and ESG-screened low carbon equity. Cardano also engage indirectly through Sustainalytics and directly through ACTIAM, a sustainable investing specialist asset manager, Cardano Group acquired earlier this year.

          NOW: Pensions’ sustainable goals

          During the Minister for Pensions’ visit, Joanne Segars, Chair of Trustees at NOW: Pensions, outlined the work that the Defined Contribution arm of Cardano has been doing towards becoming a net zero master trust.

          NOW: Pensions’ investment strategy has a strong focus on ESG integration. We have also committed our investments to be net zero by 2050, in line with the Paris Climate Agreement, with a 50% emissions reduction by 2030.

          As Joanne explained to our audience, our revised approach means that our members’ money is invested in companies that have stronger sustainability characteristics and lower carbon footprints.

          Later this year, NOW: Pensions will be publishing our first TCFD report. We have a climate change governance policy in place. We have agreed our scenarios, metrics and targets which we will be reviewing ahead of publication in the autumn.

          For us it’s not just about how and where we invest, it’s about how we act as investors and stewards of our members’ assets.

          Working together

          What is clear from the event is that we need to continue working together on these matters, sharing our ambitions, and learning and sharing our expertise where we can. It’s the only way we are going to create the change that our pension savers deserve.

          We believe that government regulations are key to this as we know that it’s not just support from other investors that matters. Regulation rewards first-movers, raises standards and addresses market inefficiencies.

          We also welcome the UK government’s Ten Point Plan for a Green Industrial Revolution. Because, despite recent momentum, global action to tackle the climate crisis has so far been highly insufficient.

          The sustainability transition is urgent, but we are falling short. Greenhouse gas emissions are still rising. We support increased transparency and accountability and commended the Minister and his department for their continued commitment to sustainability topics at the event.

          What we know is sustainability matters to our members, to our employer clients, to our staff, our industry and to us.

          Will Martindale, Group Head of Sustainability, Cardano