Closing the ‘green pensions gap’ – it sure looks like it
Making the Widow’s money matter , Maria Nazarova-Doyle and team have sent out a clear signal that they and parent company Lloyds Banking Group, mean business to avert climate disaster in the next 30 years.
- Scottish Widows will be the first major UK provider of pensions and insurance to target net zero by 2050 across its entire portfolio of investments
- It’s set out some clear milestones aiming to halve the carbon footprint of its investments by 2030
- This almost doubles the meaningful commitments the UK pension industry has made to net zero goals,
- But a massive £2.17 trillion gap remains
It says it will also be investing billions of pounds in climate solutions, such as renewable energy, low carbon buildings, and energy efficient technologies, by 2025 to underline its commitment to positive change.
Widows says their move almost doubles the meaningful commitments the pension industry has pledged to reaching net zero targets, in line with the goals of the Paris Agreement.
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 UK’s transition to a green economy.
The pensions firm is calling on the rest of the industry to urgently close the ‘green gap’ and commit to net zero with a clear path to get there ahead of the COP26 global conference on climate change later this year. Widows says that pension providers need to shift from the current piecemeal approach, to a wholesale net zero investment strategy with clear shorter- and medium-term milestones that are understood by the public, customers and policymakers.
Upping the ante
Maria Nazarova-Doyle, Head of Pension Investments at Scottish Widows, has gone into a social media to get the message out (put these declamations on a video-sharing platform Masha!)
Here is Maria from her press release
“To get there we must set shorter-term targets. Carbon emissions need to halve between now and 2030 or we won’t stand a chance of meeting the longer-term net zero goal.
“To do the job properly across all our products and investments, we’ll use our influence through stewardship activity to drive the transition to a low-carbon future in the real economy, while proactively investing in climate change solutions.
“The journey to net zero will not be easy but we are up for the challenge. A company of our scale cannot rely on mass carbon offsetting schemes to provide a false sense of security, or extensive exclusion lists to get results. Action that drives change in the real economy is the only way we can achieve the net zero goals.”
You can judge for yourself whether this makes sense in practice. Scottish Widows have a portion of their website devoted to how they intend to bring about change.
They say their approach follows the Institutional Investors Group on Climate Change (IIGCC)’s Net Zero Investment Framework, which it helped develop. This helps provide a clear, transparent roadmap for net zero. Later this year, Scottish Widows will publish a target for its overall investment in climate solutions by 2025 and the carbon footprint of existing investments. These disclosures will establish TCFD standards which I hope will give momentum to occupational schemes.
Widows has got some high level endorsements including Anne-Marie Trevelyan, Energy and Clean Growth Minister;
“Scottish Widows’ fantastic commitment will help create meaningful, large-scale change across the financial sector, positioning the UK as the global centre for green finance while protecting customers and the environment from climate change.”
But I prefer the more down to earth and less self-serving comment of Share Action CEO Catherine Howarth
“Kudos to Scottish Widows for their leadership in protecting pension assets, whilst also protecting the environment their customers and clients will retire into. The commitment to halve portfolio emissions by 2030 is especially welcome. ShareAction hopes to see many more big players in the UK’s pension sector step up in this way by the time of the Glasgow-hosted COP26 summit”.
A welcome change – but who picks up the tab?
It seems we have passed the Rubicon and going back on our commitments to net-zero at 2050 looks harder than pressing on.
Only three years ago the Widows IGC were questioning whether investing client’s money for environmental, social and reasons of good governance was a proper us of funds.
Today the question is not whether to pay but who is paying. the member may be meeting the costs in higher fees or the shareholder in lower margins. Either way, there will be a cost.
Let’s hope when Scottish Widows publish the detail about their 2025 milestone, they can also provide a statement on costs , who pays them and who will get the value for the money
My hope is that the costs incurred will be kept, as far as possible within the AMC and not corrode the unit price of the Widows’ funds.