Top UK pension sets “net-zero” target

The UK’s largest defined contribution pension scheme has set a goal of becoming net-zero on its carbon emissions by 2050 to avoid members retiring into a “world devastated by climate change”.

Nest, the multiemployer scheme with more than 9 million members, has also committed to invest £5.5bn in climate aware strategies. Importantly, it has pledged to commit its fund managers to making progress against set benchmarks, including analysing how Nest can halve its emissions by 2030.

Along with this, it has committed to actively pressure companies to align with the Paris goals and divest from companies that show little progress following sustained engagement.

Mark Fawcett, Nest’s Chief Investment Officer, said its stance would send a “strong and clear message” around the seriousness the scheme places on tackling climate change – particularly following the economic impact of coronavirus.

He said that climate change had the potential to cause catastrophic damage and completely disrupt our way of life, but as the world’s economy slowly recovers from coronavirus, investors had a unique opportunity to support sustainable growth and transition towards a low-carbon economy.

“No-one wants to save throughout their life to retire into a world devastated by climate change,” said Fawcett. “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?”

Nest is to start to move £5.5bn in equities into climate aware strategies, representing 45% of its entire portfolio. This will immediately reduce its carbon footprint by the equivalent of taking 200,000 cars off the road.

It will begin divesting from companies involved in thermal coal, oil sands and arctic drilling and be completely divested by 2025 at the latest, unless they have a clear plan to phase out all related activity by 2030.

The £12bn scheme will also invest a greater proportion of its funds directly in green infrastructure, building on the £100m it has already invested in renewable projects across Europe.