The UK’s major workplace pension scheme, Nest, is to seed a climate change fund that it has developed with UBS Asset Management.
Nest, which is a national scheme for UK workers, is to move £130.3 million (€153.9 million) into the UBS Life Climate Aware World Equity fund, which will form part of Nest’s default fund offering.
The money is taken from Nest’s existing investment in the UBS Life World Equity Fund.
The new fund aims to deliver returns broadly in line with the FTSE Developed Index, but increases exposure to eco-friendly companies.
It applies a positive tilt towards investment in companies considered vital to combating climate change, such as renewable energy producers who could get a 40% higher exposure versus benchmark.
Conversely, it will apply a negative ‘tilt’ to those firms with large carbon emissions, those with heavy fossil fuel reserves, or companies not introducing measures to tackle climate change.
The fund also concentrates voting and engagement activities on improving companies that most need to adapt their business models in order to meet climate change goals.
Mark Fawcett, Nest’s chief investment officer, said the world last year reached a major milestone in recognising the risks from climate change and agreeing to tackle them.
Saying the fund “breaks new ground”, he added: “Through the UBS Life Climate Aware World Equity Fund we can start reducing our members’ exposure to some of the worst financial impacts. At the same time they’ll get in early in industries and technologies that’ll help the global economy move away from fossil fuels.”
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