On the go: The trustees of the £11bn Co-op pension scheme, Pace, have chosen Legal & General Investment Management’s Future World Multi-Asset Fund as the default for its defined contribution section.
Around £290m out of Co-op employees’ £315m DC assets will be invested in bonds and companies that score highly in terms of environmental, social and governance performance, with an emphasis on mitigating climate change.
Gary Dewin, director of pensions at the Co-op, said: “In making this decision, the trustees were keen to provide a default fund for Co-op colleagues with a proven investment track record, but which also aligns with the Co-op’s own sustainability agenda and ethos.”
Emma Douglas, head of DC at LGIM, said: “We’re seeing increased demand from pension scheme members for investments that are aligned to their values.”
A recent survey commissioned by LGIM revealed that almost 60 per cent of scheme members said it was important that asset managers actively consider ESG issues such as climate change, levels of diversity and executive pay when selecting the companies in which to invest their money.
The Co-op pension trustees’ decision follows a growing trend by schemes to make ESG a major part of their default funds.
Master trust Nest recently announced that it would exclude tobacco companies from its holdings, and Willis Towers Watson’s master trust LifeSight is now allocating around half of the equity investments within its default fund into ESG investment strategies.
Recently – and in response to the housing crisis – the Pace trustees have also set aside £50m of defined benefit assets to invest in high-quality affordable housing as part of inflation-linked property mandates managed on their behalf by PGIM Real Estate.
