Scottish Widows has announced a new ESG policy which will see it dropping company investments worth at least £440 million that fail to meet its ESG standards. The new policy will cover investment, life and pension funds sold to clients as well as its own investments. Holdings in companies that derive more than 10 per cent of their revenue from thermal coal and tar sands, manufacturers of controversial weapons and violations of the UN Global Compact will be sold under the policy. Scottish Widows also plans to publish data on its carbon footprint in line with the Task Force on Climate-related Finance Disclosures (TCFD) Recommendations.
In recent years, we’ve seen numerous pension funds publicly commit to excluding investments which don’t meet certain ESG standards. Many pension funds are spending substantial amounts of time and money on maximising the ESG credentials of their portfolios and protecting their customers from ESG-related investment risks. This is partly due to pressure from customers (particularly millennial investors) but now, as more and more funds focus on sustainable investment, there is also increased pressure from competitors in the market. Scottish Widows’ new policy is billed as being “the most far-reaching exclusions policy” from a major pension provider. It will be interesting to see if other funds up their game and come out with even more ambitious policies.
"We have a vital role to play in shielding our customers from ESG investment risks, as well as influencing positive change through the investments we hold. This is just one step in the journey" (Maria Nazarova-Doyle, head of pension investments at Scottish Widows)