- The pensions provider is targeting higher growth and also increasing green and sustainable investments including committing to net zero by 2050
- 50 per cent of the portfolio’s net assets will be in sustainable bonds and sustainable equities by the end of 2021
- The ‘Journey Path’ to retirement for members has also been increased from 10 to 15 years to better protect savings
NOW: Pensions, the workplace pension provider for 1.8 million people, today announces an expansion to its approach to sustainable investment including commitment to Net Zero carbon emissions by 2050 and support 50% emissions reduction by 2030, consistent with the IEA and IPCC reports.
NOW: Pensions, which currently manages £2.5 billion of UK pension savings, is expanding its investments in sustainable bonds and sustainable equities to at least 50 per cent of the portfolio’s net asset value by the end of 2021. The revised approach will see members’ funds invested in an equity fund which invests in companies that have stronger sustainability characteristics and lower carbon footprints.
These changes come as a result of the Trustee’s ‘root and branch’ review of the Trust’s investment strategy and ensuring that ESG issues are integrated into all NOW: Pension’s investments. In addition, NOW: Pensions has increased its allocation to green and social bonds and has invested in a low carbon ESG equity portfolio. This is consistent with NOW: Pension’s commitment to invest in line with the Paris climate agreement to limit warming to 1.5 degrees above pre-industrial levels.
The Trustee, along with its investment manager, is also exploring an additional innovative sustainability mandate with a greater focus on environmental and social solutions that will deliver the higher return objective.
The enhanced focus on sustainability reflects the Trustee view that, as long-term investors, incorporating ESG issues into a responsible investment process is integral to long-term success. The Trustee believes it is possible to invest in a way that contributes to a more sustainable world, with a beneficial effect on portfolio returns for members.
Additional changes resulting from the investment review include:
- an increase in the return objective for the Diversified Growth Fund to focus on improved member outcomes; and
- extending the Journey Path (glidepath) from 10 to 15 years during which time members approaching retirement will be switched to the Retirement Countdown Fund. The move ensures that members approaching retirement are protected from major market movements.
NOW: Pensions continues to offer its members one default fund. An uninterrupted focus on a single investment solution ensures a strong approach to investment governance, allowing members to concentrate on the things they can influence – fundamentally when they plan to retire, what they plan to do when they do retire, and how much they should be saving.
Joanne Segars, Chair of the Trustee, NOW: Pensions said: “The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment which targets having over 50 per cent of the net assets value of the portfolio aligned to the Trustee’s ESG principles by the end of 2021. I am delighted, too, that the Trust has committed to reach Net Zero by 2050, with an interim target of 2030. We believe the focus on ESG supports better long-term financial outcomes for our members in later life.
“Our investment approach – centred around a single default fund – is focused around the needs of our members, providing returns to deliver good member outcomes, while also providing protection from market volatility as they approach retirement.”
Patrick Luthi, CEO, NOW: Pensions said: “NOW: Pensions strives to invest sustainably and we continue to monitor ways to be more effective and operate in a way that has a positive effect on our employees, our industry and our society. These changes put sustainability firmly at the heart of our investment strategy.
“We believe that financial services should improve our quality of life and will continue to highlight inequalities and fight for a fairer UK pension system to deliver the best retirement outcomes for our members.”
Notes to editors
NOW: Pensions is part of the Cardano Group, a market leader in providing risk and investment management services designed to make pensions outcomes more stable and robust.
Cardano belongs to a range of sustainable investment organisations and as NOW: Pensions’ investment manager this should reassure our members that their money is being invested in a considered and purpose-driven manner.
- PRI – UN Principles for Responsible Investment
- UN Global Compact
- NZAMI – Net Zero Asset Managers Initiative
- Climate Action 100+
- ICMA – International Capital Market Association
- IIGCC – The Institutional Investors Group on Climate Change
- PCAF – Partnership for Carbon Accounting Financials
- ICSWG – Investment Consultants Sustainability Working Group
- The Diversity Project
- TCFD supporter