Scottish Widows today launchesits Climate Action Plan, becoming the first major pensions and insurance provider to clearly define its long-term strategy for achieving its decarbonisation targets and a net-zero portfolio by 2050. The company – which looks after nearly £190bn of savings for more than six million customers in the UK – sets out four key actions in its Plan, which will enable the halving of portfolio greenhouse gas emissions by 2030 and the delivery of net zero carbon emissions by 2050 whilst maximising their customers’ return on investment. These include commitments to:
- Invest £20-25 billion into climate-aware investment strategies and climate solutions
investments by 2025. Of this, £1 billion will be specifically invested in climate solutions such as renewable energy, low carbon buildings, and energy efficient technologies - Ensure climate impacts are at the core of asset allocation decision-making
- Exclude high carbon investments that are at high risk of becoming stranded assets
- Focus stewardship activity on companies failing to address climate change risks
Scottish Widows has also announced it has made an additional £3 billion investment in Blackrock’s Climate Transition World Equity Fund. This BlackRock fund has a bias towards firms with improved climate credentials to ensure that pension savers reap the benefits of a blooming low-carbon economy. The investment announced today builds on an existing £2 billion allocation, bringing the total Scottish Widows investment in this fund to £5 billion.
Maria Nazarova-Doyle, Head of Pension Investments and Responsible Investments at Scottish Widows, said:
“We believe the move to net zero will offer longer-term sustainable growth for our customers’ pension savings, by leveraging low-carbon transition opportunities among some of the world’s most forward-looking companies.
“Controlling trillions of pounds worth of investments, the pensions industry has a responsibility to act as a responsible steward for the success of climate solutions – and to exclude investments in high carbon companies which are resistant to change.
“We look forward to other providersjoining us and helping set out how the UK pensions industry will achieve large-scale net zero commitments, setting a clear expectation for high-carbon sectors resistant to change. Together, we can safeguard the future of our customers’ pension savings – and our planet.”
As part of its ambition to achieving a fully net zero portfolio by 2050, Scottish Widows has previously committed to halving the carbon footprint of all its investment portfolios by 2030, and last year relaunched Scottish Widows Environmental Fund as fully fossil fuel-free. In recent years, the company has also financed over £400 million of direct flows into green energy solutions such as wind power generation and solar farms and divested near £1.4 billion from companies that haven’t met their ESG standards.
As one of the founding signatories to the Paris Aligned Investment Initiative (PAII), Scottish Widows drew on the PAII Net Zero Investment Framework to produce its Climate Action Plan. The Framework provides a useful template for the UK pensions industry as other players look to develop their own climate plans.
Moving to net zero will safeguard customers’ investments in the long-term from the risks associated with climate change while taking advantage of related investment opportunities. This will ensure Scottish Widows continues to meet its core purpose of looking after its customers savings, as well as helping to power the transition to a green economy.
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