Scottish Widows ‘reboots’ £250m environment fund to screen against fossil fuels

Scottish Widows research found that 56% of defined benefit (DB) pension savers would consider investing their pension funds in clean

The new fund is focused on investing in “great green” British businesses and will be screened to ensure that fossil fuels are completely ineligible to be supported through it. It will aim to invest in companies making a positive impact to the environment and those that are leading their sectors through progressive policies.

The reboot is based upon the original Scottish Widows Environmental Fund that was launched in 1989. It currently holds assets of approximately £250m and is available to six million customers.

The fund will not invest in companies that are involved in the extraction, production, supply and transportation of fossil fuels. It also excludes those generating power from fossil fuels or those that receive revenue from nuclear energy.

Scottish Widow’s head of pension investments Maria Nazarova-Doyle said: “The launch of our refreshed Environmental Fund offers our customers an opportunity to engage in environmental impact investing, an approach that not only aims to achieve good financial returns but sets out to have a measurable and positive impact on the environment.

 “Responsible investing enables investors to seize new opportunities and manage risk. By investing in this fund, customers can help address some of the global challenges we face in areas such as climate change, sustainable agriculture, pollution and renewable energy.”

Scottish Widows research found that 56% of defined benefit (DB) pension savers would consider investing their pension funds in clean, fossil fuel-free energy. This figure rises to 67% amongst investors aged 18-34.

Ricard Curtis’s Make My Money Matter campaign recently wrote to more than 80 DB pension schemes, including those associated with Exxon, Vodafone, BP, Barclays and the BBC, calling on them to align with the UK’s net-zero target for 2050.

Net-zero aspirations

Earlier this year, Scottish Widows, which manages funds totalling £170bn, has committed to halving financed emissions by 2030 on the pathway to net-zero.

Scottish Widows’ statement 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. Late last year, the company introduced a new exclusions policy that will see it divest some £440m from businesses including those in the thermal coal and tar sands sectors.

Beyond divestment and investment, Scottish Widows is planning to increase engagement with financed companies to encourage them to adopt lower-carbon technologies, systems and processes. It has not yet confirmed plans for carbon insetting or offsetting but claims these will be a smaller part of the puzzle. 

Some £2.17trn – or 85% of the UK’s pension savings – are not currently held in funds committed to net-zero, according to the 2020 Global Pension Assets Study from Willis Towers Watson.

Matt Mace

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