In a momentous development, The People's Pension has unveiled its ambitious plan to transition 70% of its assets, totalling £15 billion, into 'climate aware' investment strategies. This bold move signifies a significant shift in the pension provider's approach, with intentions to divest from traditional investment avenues.
Under this initiative, the £25bn master trust, a vital component of the People's Partnership, aims to align 70 per cent of its assets within the default global pension investments fund with the ambitious Paris Agreement target of limiting global warming to 1.5C by 2030. This proactive stance demonstrates the organization's commitment to combating climate change globally.
Moreover, The People's Pension commits to divesting from companies involved in thermal coal production, a decision expected to reduce the carbon footprint of its vast membership base, consisting of over 6.5 million default pension holders, by a notable 30 per cent. This move sets a precedent for responsible investment practices within the pension industry.
Looking ahead, the pension provider anticipates a continual decrease of seven per cent year-on-year in emissions, paving the way towards achieving net zero emissions by 2050 through implementing this comprehensive strategy. This ambitious roadmap underscores The People's Pension's dedication to sustainability and environmental stewardship, setting a commendable example for the financial sector.
The provider said the new strategy aimed to "manage the long-term risks" from climate change that may affect its members' investments, which it said "aren't currently being priced by the market".
"We believe the changes we have announced mean that The People's Pension is now one of the greenest master trusts in the UK, which is great news for our members," said People's Partnership chief investment officer Dan Mikulskis.
"Asset owners like us are uniquely positioned to use our size and influence to ensure our members' savings are allocated and managed responsibly and that the companies in which we invest are acting in responsible and sustainable ways. Key to our investment philosophy is conviction in what we do - if we believe in something, we want to make it core to our members' retirement savings rather than a tick to a box, and that's what we've done here."
Mark Condron, trustee chair at the People's Pension, described today's announcement as a "hugely significant moment" for the pension provider's 6.5 million members "as it reinforces our commitment to tackling climate change through investing."
"Our members can be confident their savings are working towards achieving net zero targets and not against it," he said.