Keeping cool
WINNER
“It’s clear that Nest is committed, knowledgeable, and driven. It has a good set of ambitious targets, breadth of opportunities and oversight of asset managers,” judge’s comment
Country |
United Kingdom |
Founded |
2010 |
Type |
Defined contribution |
Members |
12,500,000 active |
Assets |
€26,8000m |
Performance |
Nest 2040 Retirement Fund (default fund) -3.3 1-year to year end 31 March 2023; 6.2% 1-year to 30 June 2023 / Nest Ethical Fund 3.2% 1-year to 30 June 2023 / Nest Higher Risk Fund 5.7% 1-year to 30 June 2023 / Nest Sharia Fund 14.8% to 1-year 30 June 2023 / Nest Lower Growth Fund 0.5% 1-year to 30 June 2023 |
Nest is transitioning its investment portfolio towards a net-zero carbon strategy, setting a goal to achieve this by 2050. It aims to halve carbon emissions by 2030 and has outlined specific targets, including a 30% reduction in Scope 1 and 2 emissions from listed equity and fixed income portfolios by 2025.
To achieve these goals, Nest has excluded from its portfolio companies that generate more than 20% of their revenue from thermal coal, oil sands, and Arctic oil and gas exploration. It plans to tighten these thresholds this year and exclude all remaining companies by 2025 with a committed phase-out by 2030.
Nest integrates net-zero targets and climate considerations into its statement of investment principles. More than two-thirds of its assets are in mandates with specific climate change objectives. It invests directly in green infrastructure projects including solar and offshore wind farms.
Nest actively uses its influence in its voting and engagement policy to encourage companies toward net-zero. It evaluates fund managers based on their sustainability approaches, climate risk integration, and overall net-zero commitments in line with the recommendations of the Task Force on Climate-related Financial Disclosures.
STRATEGIC TAKEAWAYS
➤ Initiative to exclude thermal coal, oil sands and Arctic oil and gas companies by 2030 |
➤ More than two-thirds of assets in mandates with specific climate-related objectives |
➤ Active engagement with and monitoring of portfolio companies through collaborations |
WINNER
“PensionDanmark presents a comprehensive and ambitious approach to net zero, with clear quantified targets for reducing carbon emissions,” judge’s comment
Country |
Denmark |
|
Founded |
1992 |
|
Type |
|
|
Members |
416,000 (active,) |
|
Assets |
€41,000m |
|
Performance |
-5.8% (1yr) |
PensionDanmark has long been a leader on environmental issues and is a co-founder of the Net-Zero Asset Owner Alliance. It aims to contribute to a global economy with net-zero greenhouse gas emissions by 2050 and limiting the average global temperature rise to 1.5°C above pre-industrial levels.
In 2021-22, the pension fund expanded its carbon assessments across various asset classes, covering 80% of its investment portfolio. It aims to reduce direct emissions by 74% by 2025 compared to 2018.
It is an active owner of assets and engages with several international initiatives on climate change and other sustainability issues. More than a third of dialogues with listed companies in the past year related to climate change.
Last year, PensionDanmark’s allocations to renewable energy sources and related technologies resulted in the avoidance of 1.3m tonnes of carbon emissions. It aims to reach 2m tonnes of emissions avoided by 2025 and to increase the green energy production capacity of its portfolio to 800 megawatts by 2030. To support this, it has invested several ‘next generation’ green investments, such as Danish cleantech business Stiesdal.
STRATEGIC TAKEAWAYS
➤ Global leader in net-zero and other environmental initiatives |
➤ Internal measurements and assessments of carbon emissions now cover 80% of its investments |
➤ Green energy and tech investments to avoid 1.3m tonnes of carbon emissions, with an aim of 2m by 2025 |
HIGHLY COMMENDED
Country |
France |
AUM |
€38,333m |
Performance |
-12.47% (1yr); |
ERAFP has a long-established socially responsible investment policy covering the entire investment portfolio. Climate change forms a core pillar of this policy. It established an Energy Transition Steering Committee in 2020 to lead its efforts to invest in and promote renewable energy. ERAFP has invested approximately €14bn into assets and strategies supporting the transition to a low-carbon global economy. This includes a sizeable investment in green bonds and a push towards real estate assets aligned with the Paris Agreement on Climate Change.
Country |
United Kingdom |
AUM* |
€46,043m |
Performance) |
n/a (1yr) |
Border to Coast Pensions Partnership established its first net zero implementation plan in October 2022, setting out metrics and targets for reducing the carbon footprints of the range of investment funds it oversees. This currently covers 57% of the pool’s £40.3bn (€46.3bn) in total assets. The organisation is actively engaging with its pension fund clients, asset managers and data providers to improve carbon-related data and bring more assets into scope. It is prioritising the remainder of its fixed income funds and its private markets offerings.
Judged by
Helga Birgden
Robert Black
Erik Landry
Nick Spencer
Sponsored by
