Columbia Threadneedle Investments says move would align objectives with measurable social impact

First published in Professional Pensions here.

Columbia Threadneedle Investments portfolio manager Tammie Tang

Pension schemes should integrate UK social bonds within default strategies, Columbia Threadneedle Investments (CTI) says.

CTI suggested pension funds, including defined contribution (DC) schemes and master trusts, are increasingly looking at social impact investing, and urged schemes to integrate UK social bonds within default strategies to “align objectives with measurable social impact”.

A report on social performance by the firm, in association with the Big Issue Group, highlighted the role DC schemes have in advancing UK growth and social outcomes – noting there is opportunity to partner with managers providing independent impact reporting and transparent frameworks, and use the asset class to diversify credit exposure while supporting economically productive projects across the UK.

CTI noted integrating social bond solutions – such as the CT UK Social Bond Fund – into pension funds, including DC schemes and master trusts, “provides access to high-quality UK social and sustainability bonds which support national growth and regional development”.

It also said such solutions could help meet the ‘Just’ transition goals, help scale the UK impact investment market, and provide liquidity appropriate for the DC structure

“with the dual objective of providing financial return and positive social impact”.

The report noted pension products play a “fundamental role” in strengthening financial security,

“particularly for people facing life events that can destabilise their income or wellbeing”.

CTI portfolio manager Tammie Tang said:

“At a time when the Mansion House Accord calls for a transformational step change in the allocation of pension capital to UK growth assets, we believe that investments focused on social outcomes are not only compatible with fiduciary duty but are essential to delivering long term value for savers and society. By investing where capital is most needed, whether in affordable homes, resilient utilities or accessible transport, we strengthen the foundations of inclusive growth across the country.

“Master trusts have the scale to transform the reach and impact of retirement savings. Their backing can drive positive change in society while delivering outcomes for members and raising market standards through active engagement and clear outcomes reporting. We believe social‑outcomes investing sits at the heart of the next phase of DC pension evolution.”