Edinburgh-based pension giant Scottish Widows has launched four “environmental and climate-aware” funds, with underlying assets worth £1.4bn.
The Global Environmental Solutions Fund is the flagship strategy, and it aims to direct pension investment into companies that provide solutions to “critical environmental issues”, such as global greenhouse gas emissions, food security, pollution, and biodiversity loss.
The environmental solutions fund was developed in partnership with, and is managed by, Schroders.
Scottish Widows said: “The fund invests in companies that derive at least 50% of their revenues from goods and services that facilitate sustainable alternatives in transportation, electricity and heat production, water use, agriculture, or industrial manufacturing.”
Also eligible for investment are companies that direct at least one-fifth of capital expenditure to adapting their businesses, or services, to the circular economy.
In addition, in the eyes of Schroders, companies that exert “significant influence” over their supply chains or customers to reduce emissions, also fall within the fund’s investment universe.
Maria Nazarova-Doyle, head of responsible investments and stewardship at Scottish Widows, said: “With the launch of our new fund, we’re taking steps ourselves towards driving major investment into better outcomes for the environment as well as our customers.
“We have an urgent imperative to support the companies attempting to drive the change our planet desperately needs, while protecting the savings and livelihoods of our members in the long run. More innovative solutions are on the horizon, but we must work together to ensure they become a reality.”
The other three funds invest in regional equities, and each track a decarbonising index.
The sole UK-focused strategy of the three tracks the FTSE All Share Climate Transition Index as a benchmark. The remaining two track a FTSE Paris-aligned index, with one investing in developed economies, and the other in emerging markets. The latter is managed by Abrdn, while the UK and developed-world funds are managed by Blackrock.
The strategies will be used as building block components for over 80 Scottish Widows multi-asset funds.
