Combatting greenwash and divestment decisions: Inside Scottish Widows’ efforts to make pensions greener

EXCLUSIVE: Scottish Widows’ head of pension investments and responsible investment, Maria Nazarova-Doyle outlines the efforts the company is introducing to combat greenwash and a lack of standards and definitions as it builds towards net-zero emissions by 2050.

Combatting greenwash and divestment decisions: Inside Scottish Widows’ efforts to make pensions greener

Nazarova-Doyle (pictured) spoke to edie for Climate Finance Week

According to Make My Money Matter, around two-thirds of the UK’s £2.7trn pensions sector is accounted for by providers that have not yet made “credible” net-zero commitments.

Indeed, climate finance can be viewed as a bit of a “wild west” that has seen many firms commit to net-zero, but continue to favour high-carbon projects and businesses. Additionally, research suggests that half of the capital raised by green bonds in 2021 can be used to finance or refinance existing projects, which may limit their real-world impact on reducing emissions and improving mitigation. Also noted is the fact that only 40-50% of the green bonds market can be classed as ‘dark green’ or ‘actively green’ – the class with the highest positive environmental impact.

So, the path to a net-zero finance sector may be paved with good intentions, but how are firms in the sector ensuring that their money is being used for maximum value when it comes to decarbonisation.

For Scottish Widows’ head of pension investments and responsible investment, Maria Nazarova-Doyle, there is a need for collaboration between investors, policymakers and businesses to ensure that the steps being introduced by financial firms can deliver tangible results.

“A major challenge is corporates and the governments doing their part to ensure that society can transition to net zero on time and in an orderly fashion,” Nazarova-Doyle told edie.

“There is only so much investors can do to enable this move, other parties need to keep up their end of the deal for all of us to see success in this huge change across the whole global economy.

“Collective engagement initiatives like Climate Action 100+ and others have improved the quality of engagement and as a result, the quality of outcomes. There is an issue in the industry at large in terms of definitions though but this would need to be solved through regulations and a good example of positive progress in this area is the UK’s green taxonomy.”


Last year, Scottish Widows, which manages funds totalling almost £190bn, has committed to halving financed emissions by 2030 on the pathway to net-zero.

Scottish Widows claims that, by investing “billions of pounds” in sectors like renewable energy generation, technologies that improve energy efficiency and low-carbon buildings, it can deliver the necessary decarbonisation. At the same time, it will continue to divest from companies that are lagging behind on environmental, social and governance (ESG) issues.

The company has since bolstered its 2050 net-zero target with a new climate action plan, published ahead of the UK Government’s requirement for all financial firms to disclose how they are approaching the transition.

The new Climate Action Plan confirms an ambition for Scottish Widows to reach up to £25bn in “companies leading on climate solutions and decarbonisation” by 2025, up from £5bn at present. £3bn of the £5bn currently invested was announced today, also, in BlackRock’s Climate Transition World Equity Fund. This Fund invests in companies “that are well-positioned to maximise the opportunities and minimise the potential risks associated with a transition to a low carbon economy”.

At least £1bn of the £25bn will go to mature and shovel-ready low-carbon sectors including building retrofitting and renewable electricity generation using wind and solar.

Nazarova-Doyle told edie that Scottish Widows is working with other firms in the finance sector to help define what sustainable climate solutions are to them.

“We’re working closely with our strategic fund management partners BlackRock and Schroders to develop and refine a range of funds that have a bias toward investing in companies that are adapting their businesses to be less carbon-intensive and/or developing climate solutions,” Nazarova-Doyle added.

“We will invest in climate solutions investments either within these strategies or other funds. To define climate solution investments, we look at company revenue associated with activities such as alternative energy, energy efficiency, green building, sustainable agriculture, sustainable water, and pollution prevention. We use MSCI Environmental Impact Revenue data to help with this classification.”

Divestment decision

It is not only what Scottish Widows chooses to invest in that can help make an impact on the wider net-zero shift. The company has also introduced divestment policies to ensure money is moved away from carbon intensive and controversial sectors.

Scottish Widows is moving to exclude companies deriving more than 10% of their revenue from tobacco from its investments, stating that tobacco holdings should be “irreconcilable” with robust responsible investment strategies. The company believes this is due to the negative impacts of tobacco on human health and due to widespread challenges in removing human rights abuses from the industry’s supply chain.

The savings, insurance and investment giant said in a statement that it has already moved to divest from companies that do not operate in line with the UN Global Compact principles. Yet, tobacco companies are not permitted to sign up to these principles.

The company has also updated its exclusions policy for fossil fuels. Companies deriving 5% or more of their revenues from thermal coal mining or tar sands will now be excluded. Previously, the threshold was 10% of revenues.

Nazarova-Doyle informed edie that Scottish Widows had divested around £3bn from fossil fuels and “companies that violate UN Global Compact”, at a total exposure level, but that they were working on engagement mechanisms for some companies that don’t fall into these areas, but that do breach the parameters for investment.

“The only areas where we are having a focused timed engagement is in the largest few UNGC violators in our portfolio where they have been given three years to clear the violation before we would move to divestment,” Nazarova-Doyle added.

“These engagements have been positive, and companies welcome the opportunity to have a dialogue with us and to be able to explain their position to investors directly plus outline their plans on how they are managing to improve.”

To further help provide clarity on how pensions from the firm are performing, the company launched a digital ‘Find Your Impact’ tool, which enables those using its workplace pension products to track how their investments are performing both financially and in terms of their environmental impact.

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