With growing interest from consumers about how their money is invested, it is important for large scale investors, such as pension funds to consider not only how they achieve consistent growth but also the impact of their investment strategy.
Nest believes that companies with good Environmental, Social and Governance (ESG) practices will deliver better long-term investment results for members as well as help global efforts to tackle climate change and other issues.
Nest works closely with current and prospective fund managers to ensure they fulfil their responsibilities in addressing material ESG factors in the investment process and stewardship on their behalf.
In 2019, Nest announced their decision to go tobacco-free across their investment portfolios. They also announced that they would start using the live databases of RepRisk and Sustainalytics to increase their ability to invest responsibly and further integrate ESG factors into their investment strategy, allowing them to spot ESG risks and screen out certain assets.
In July 2020, Nest launched its Climate Change Policy, including a commitment to making the entire Nest investment portfolio net-zero on carbon emissions by 2050, and the intention to halve emissions by 2030.
The Nest Retirement Date Funds hold a climate-aware global developed equities fund which over-weights companies making a positive contribution towards limiting climate change and reducing carbon, while under-weighting those which are least aligned to meeting industry carbon reduction targets. They also concentrate voting and engagement activities on improving companies that most need to adapt their business models to meet climate change goals.
The funds also hold an ESG-screened emerging markets equities fund, two climate transition corporate bond strategies, a renewables infrastructure fund, an ESG-screened commodity fund and an environmentally aware liquidity fund.
Nest is the UK’s largest auto-enrolment compliant workplace pension scheme, which is used by 10 million savers and at the end of December 2021 had over £23bn invested on behalf of members.
Nest is one of only four Master Trust based schemes to hold a Defaqto 5 Star Rating and has done so consistently for five years. To put this accolade into perspective, 87% of Master Trusts and 66% of all retail workplace pension schemes on the Defaqto database have a lower rating.
Defaqto is a leading financial information, ratings and fintech business. Its unbiased star ratings help consumers, financial institutions and financial advisers make better informed decisions.
Nest commissioned Defaqto to conduct an independent fact-based review of the Nest pension scheme, download the full review here.
