On the go: Master trust Nest has introduced a climate change policy with the aim of achieving carbon neutrality across its investment portfolio.
The climate change policy, published on Wednesday, sets out the government-backed provider’s goal of having a net-zero carbon footprint across its investments by 2050 or earlier, with a goal to cut carbon emissions in its portfolio in half by 2030.
The policy aims to align Nest with the Paris Agreement goals of keeping global temperature rises within 1.5C of pre-industrial levels by 2050.
To do this, Nest plans to move £5.5bn of shares into climate-aware strategies, representing 45 per cent of its entire portfolio.
According to the scheme, this will immediately reduce Nest’s carbon footprint by the equivalent of taking 200,000 cars off the road.
The provider will also begin to disinvest from companies involved in coal, oil and arctic drilling, with the goal of becoming completely disinvested by 2025.
A greater proportion of its funds will be in green infrastructure, and Nest will “actively pressure” companies to align with the Paris goals and disinvest from any that show little progress.
In addition, it will commit its fund managers to make progress against set benchmarks.
Mark Fawcett, Nest’s chief investment officer, said the announcement sends a “strong and clear” message of the seriousness it places on tackling climate change, particularly following the economic impact of Covid-19.
Mr Fawcett said: “Just like coronavirus, climate change poses serious risks to both our savers and their investments. It has the potential to cause catastrophic damage and completely disrupt our way of life. No one wants to save throughout their life to retire into a world devastated by climate change.
“As the world’s economy slowly recovers from coronavirus, we want to ensure this recovery is a green one. We have a unique opportunity to support sustainable growth and transition towards a low-carbon economy.”
He added: “We believe our new policy sets out a clear vision of where we’re heading. We’ll now work on taking the necessary steps to become net-zero, using our close partnerships with fund managers to amplify our impact and co-ordinate activities towards meeting the Paris Agreement goals.
“Not only is this the right thing to do, it’s also what our savers want and expect from us. How can we offer them the prospect of a better retirement if we ignore the world they’ll be retiring into?”
The move was hailed by campaigners as a potential inspiration to others. Lauren Peacock, campaign manager at ShareAction, said: “We warmly welcome Nest’s new policy on climate change and hope it will encourage other pension schemes to up their ambition. Nest’s policy acknowledges the impact of its investments on the planet and takes responsibility for them.
“By committing to engage with companies head on, all the while moving assets out of high-carbon sectors, Nest is setting clear expectations for those most responsible for the climate emergency and demonstrating the power of pensions to move them along a more sustainable path,” Ms Peacock added.
“It is vital that engagement moves past disclosure and leads to meaningful change by companies if we are to curtail the climate crisis.”
