The Trustees of the Cushon Master Trust, the world’s first net zero pension, have unveiled their new investment strategy to further improve engagement levels and ultimately member outcomes. The new strategy which launches in early 2022 will reduce investment risk as the world moves towards a greener future.
In an industry first for the defined contribution pensions market, the new portfolio of investments, through the use of listed bonds and equities and a multi asset private markets portfolio, delivers social impact that savers can feel proud of. It is currently the largest Master Trust allocation to private markets (15%) and the first in the DC sector to deliver impact across 100% of the portfolio.
Cushon’s new strategy aims to increase the potential for greater investment returns by focusing on greener companies which are generally expected to perform better in the longer term. Cushon’s 200,000 members’ pensions will be invested in environmental projects such as the planting of new sustainable forests and in financing new wind and solar farms. It will reduce risk by improving diversification, ensuring members’ money is safeguarded against lower returns from ‘brown’ (carbon emitting) investments as the global economy transitions to net zero.
To ensure strong returns for members the Trustees will, for the first time, include private market investments. These historically have not played a big part, if at all, in defined contribution pensions but they offer improved potential returns with markedly reduced investment risk as they allow for further diversification.
The Trustees will work with Schroders Capital to manage investments in new high impact projects including private equity, forestry and new social housing. Lombard Odier Investment Managers will manage listed bonds focusing on the most promising companies that are accelerating towards net zero with the aim of supporting that transition. Wellington Management will manage listed social impact bonds, and listed equities will be managed by Macquarie Asset Management to a Cushon custom designed climate and social impact index created by Solactive.
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