Pension scheme Nest unveils new plans for net-zero journey

Nest, the workplace pension scheme representing a quarter of the UK workforce, will take another step in reducing its carbon footprint while increasing investment in emerging market equities.

In July, Nest launched its Climate Change strategy, aligning the scheme with being net-zero by 2050 or sooner and expecting to halve emissions by 2030.

Now, to meet its interim target, Nest will almost double its investment in renewable energy, energy efficiency and green buildings in emerging markets.

They plan to almost double its investment in emerging market equities from around £480m to an estimated £930m by February next year, while reducing investments in fossil fuels and carbon-intensive firms.

“It’s crucial that investors in such a strategy are active stewards for companies in emerging markets. We’ll encourage companies to prepare for the low carbon transition to ensure they remain attractive investments for our members,” says Diandra Soobiah, Head of Responsible Investment at Nest.

This move will take Nest’s investments in dedicated climate-aware strategies to nearly £8 billion, representing half (51%) of the scheme’s overall portfolio as of February 2021.

In collaboration with Northern Trust Asset Management, the new strategy, which addresses a range of environmental, social and governance risks, will tilt investment in companies based on a score calculated on energy efficiency, alternative energy, and green building, while reducing investment in companies with large oil or gas reserves, and those with high carbon intensity.

Nest represents more than a quarter of the UK’s workforce and manages a portfolio of more than £12bn.

Marie Dzanis, Head of Northern Trust Asset Management, EMEA, celebrated this collaboration and opportunity to provide innovative solutions for Nest to continue investing responsibly in emerging markets:

“Through our participation in initiatives, such as a Climate Action 100+ signatory and being a founding member of One Planet Sovereign Wealth Funds, we are committed to continuing our engagement in the industry and understand the importance of meeting investors wherever they reside on their ESG journey to help them build more resilient portfolios as we transition to a low carbon economy.”