Smart Pension halves financed emissions from default fund in less than a year

The pension scheme made the commitment in July 2022, as an interim step on the road to reach net-zero financed CO2 emissions by 2040. It set a 2025 deadline.

This week, Smart Pension is celebrating the achievement of the goal two years ahead of schedule and less than one year after it was announced. It has done so by reducing investment in high-carbon sectors, increasing investment in low-carbon sectors and engaging with projects it invests in on climate impact.

“We are proud to be at the forefront of the UK’s sustainability drive, having committed to some of the most ambitious and challenging green targets in our industry, and we are already exceeding them,” said Smart Pension’s chief investment officer Paul Bucksey.

The progress has been welcomed by the Make My Money Matter campaign, of which Smart Pension is a member.

Smart Pension serves one million people across more than 70,000 employers and the majority of its customer base are using the default growth fund. The fund, and two others offered by Smart Pension which it describes as ‘sustainable lifestyle funds’, are all classified as Article 8 or higher through the EU’s Sustainable Finance Disclosure Regulation. The Regulation, introduced last year, imposes ESG standards which funds need to meet in order to be described as ‘sustainable’ or ‘low-carbon’. It also sets minimum standards for all asset managers.

Article 8 Funds are often described as ‘light green funds’. They are required to invest in companies or projects which “follow good governance practices” only.

Smart Pension is aiming to reach net-zero across all funds by 2040. The UK-based pension scheme first committed to outpacing the UK’s 2050 net-zero target in early 2021.

Bucksey added: “The pension industry has a golden opportunity to drive faster decarbonisation, by investing in businesses that are serious about cutting their carbon emissions. This is exactly why we have an unwavering focus on achieving our 2040 net zero target. We want to help our members secure not just long-term financial growth but also a safer, healthier world in which they can retire.”

The news from Smart Pension comes as e-retailer Amazon and broadcast giant Comcast face backlash over the climate risks associated with their pension schemes. Nonprofit As You Sow has submitted shareholder motions at both companies, asking them to disclose more information about plans to decarbonise their pension schemes and protect the schemes from climate risk. Amazon and Comcast are seeking to block these motions.