- 76% of total holdings in the Diversified Growth Fund are now directly linked to the Trustee’s responsible investment objectives.
- Level of equity investments that have targets in place approved by the Science Based Targets initiative (SBTi) increases to 43%.
- The carbon footprint is 52.0 tons of greenhouse gas per million pounds invested for scope 1 and 2 in 2024, down from 63.1 tons in 2023.
22 October 2024: A new investment strategy, implemented by now:pensions in Q1 2024, has enabled the Master Trust to make more of a real world impact on climate, whilst making good progress on its commitment to reaching net zero greenhouse gas emissions by 2050, with an interim target of a 50% reduction by 2030, based on 2019 levels.
now:pensions’ new narrative-based scenario analysis, as outlined in its Task Force on Climate-Related Financial Disclosures (TCFD) report, reinforces that a 3°C or higher warming scenario would be catastrophic for most investment portfolios as the systematic economic consequences would likely be dire. It strengthens now:pensions’ commitment to make a real-world impact by stewarding its company holdings in a way that will contribute to limiting the warming to 1.5 – 2°C by 2050.
As part of the change in investment strategy, the global equity investments are managed directly by the scheme’s in-house investment manager, Cardano Risk Management Limited (Cardano). This allows now:pensions to have direct engagement and influence on its company holdings and can support these companies in their transitions to net-zero or if there is no credible transition plan, choose to disinvest.
Overall, around 60% of now:pensions’ Diversified Growth Fund is now invested in an equity strategy that seeks to support the transition, around 11% is in sustainable and green bonds (bonds which finance the climate transition and other environmental and social issues) and around 4% is in a corporate credit strategy that seeks to supports the transition.
Consequently, 100% of its physical global equity company holdings and 76% of total holdings directly link to the trustee’s responsible investment objectives.
Increased investments meeting SBTi commitment
Digging in deeper to the analysis in the 2024 TCFD report, now:pensions’ new strategy has allowed the scheme to increase the level of investments within its portfolio that have targets in place approved by the SBTi. Under the new strategy, 43% of the global equity company investments now have a SBTi approved target, representing over 30% in the overall portfolio.
now:pensions also report that there has been good progress on reduction of the carbon emissions intensity of its portfolio in-line with the pathway to net-zero by 2050 it set out. The carbon footprint is 52.0 tons of greenhouse gas per million pounds invested for scope 1 and 2 in 2024, down from 63.1 tons in 2023.
For scope 3 emissions, 390.8 tons were recorded, down from 524.3 tCO2e in 2023. These metrics measure the emissions intensity of our corporate exposures which has declined due to the change in investment strategy. As a result of these changes to the investment strategy, now:pensions’ holdings now have a lower carbon impact.
In terms of progress to net-zero, now:pensions is on track to achieve net-zero by 2050 and a 50% reduction by 2030, based on 2019 levels.
Martyn James, Director of Investment at now:pensions, comments, “Earlier this year we took the decision to implement a new investment strategy to our portfolio. This was set, not only with the ambition of improving performance and value for money for our members, but to also comprehensively improve our sustainable approach to investment. This new approach is strongly linked to our conviction and the principles of our Trustees, to deliver a scheme that puts sustainability at the heart of its investment approach.
“We are proud of the progress that we have made in this last year, with the number of our investments backed by a recognised Science-Based Target increasing, while the carbon emissions per million invested has significantly decreased. These developments put us well on our way to achieving our objectives of a 50% reduction in carbon emissions by 2030, based on 2019 levels.”
Keith Guthrie, Head of Sustainability at now:pensions adds:
“The change to an equity strategy managed directly by our in-house investment manager allows improved stewardship, helping to deliver improved financial outcomes and contribute to a more sustainable economy. As our strategy becomes more imbedded, alongside our ability to play a more active role in our stewardship and influence with the companies we invest in, we believe we can move closer to achieving real world decarbonisation as a result of companies reducing their emissions.”
“While we would like to see the world decarbonise even more quickly than the 2050 target, the reality is that global emissions have yet to peak, let alone decrease in-line with the pathway we have set out. As a result, an important part of now: pensions strategy is to remain invested and engage with those high emitters of today whom we believe can develop credible plans to achieve net-zero by 2050. With its new investment strategy we are able to do that.”
Joanne Segars, Chair of the Trustee Board, now:pensions trustee limited adds:
“The Trustee expect the combination of stewardship and our investment framework to deliver good outcomes for our members, while contributing to the transition to a more sustainable economy, environment, and society. It’s great to see that we’re on track.”
ENDS
Notes to Editors
For more information, please contact:
now:pensions
Instinctif Partners
Libby Wallis/Isaac Seiger
*TCFD Report 2024: www.nowpensions.com/tcfd
** Stewardship Policy 2023: https://www.nowpensions.com/resource/stewardship-policy/
Sustainability at now:pensions: https://www.nowpensions.com/about-us/our-sustainability-focus/
About now:pensions
now:pensions is an award-winning UK workplace pension provider. We look after the pension savings of millions of members on behalf of tens of thousands of employers from a wide range of industries.
We have a clear mission – to help everyone save for a more financially secure future. This means achieving the best financial outcomes for our own members, while fighting for a fair pension system to enable all pension savers to enjoy the retirement they deserve. We do this by highlighting pension inequalities and campaigning for change.
now:pensions is proud to support the Spring PRI Initiative for nature, taking an active role to halt and reverse global biodiversity loss by 2030. In recognition of its stewardship and responsible investing practises, now:pensions became a signatory of the UK Stewardship Code in 2024.
We are the UK’s third largest auto enrolment pension provider by number of members.
now:pensions is part of the Cardano Group, a market leader in providing risk and investment management services designed to make pensions outcomes more stable and robust.
What is the TCFD?
The Taskforce for Climate-related financial disclosures (TCFD) was established in 2015 by the Financial Stability Board (FSB). It is an industry led reporting framework setting out recommendations for companies and investors to organise and standardise their climate disclosures.
It was set up because the TCFD considered:
- The financial risks and opportunities posed by climate change are not fully understood or priced by financial markets.
- Corporate and financial institutions are not prepared for the transition to a low-carbon economy which will lead to misallocation of assets, the risk of asset stranding, and market volatility – in other words, costs to long-term savers.