£1bn National Pension Trust switches to ESG ‘default’

The National Pension Trust (NPT), a multi-employer master trust powered by XPS Pensions Group, is set to shift its default arrangement to a strategy that will be guided by environmental, social and governance (ESG) principles from this month.

The change will mean that the savings of over 44,000 members, representing almost £1 billion in total assets, will be invested more sustainably going forward.

The Trust’s new ESG-oriented default arrangement will focus on climate change and the carbon transition while aligning with a 2oC investment policy.

It will also aim to invest members’ savings in a way that aligns with the UN’s Sustainable Goals.

The new investment strategy will see NPT act in partnership with State Street Global Advisors, the Transition Pathway Initiative (TPI), and Legal and General Investment Management to align its portfolio with the goals of the Paris Agreement and inform its investment research.

The TPI seeks to speed the transition to a low-carbon economy by weighting investment towards those companies that can demonstrate that their operations align with Paris Agreement targets, and which meet the recommendations of the Taskforce on Climate Related Disclosures.

Paul Armitage, Head of the National Pension Trust, said: “Climate change poses a real risk to our future, which is why we want to make the way we invest assets more sustainable.

“That’s why we have selected the TPI – it achieves our initial goals for reduced carbon exposure today, reducing carbon related metrics by c. 50% now – but also incentivises a transition to future lower carbon intensity for businesses around the world by allocating capital to those firms that do it best.”

Ian Davies, Chair of Trustees for the National Pensions Trust, said: “Developing our new default fund is an important step for the National Pension Trust.

“It is another example of how NPT is committed to providing market leading investment strategies that reflects the preferences of our members while helping employers meet their ESG responsibilities.”

Alistair Byrne, Head of UK Institutional Distribution at State Street Global Advisors, said: “UK pension schemes are actively seeking to provide their members with exposure to the investment opportunities generated by the transition to a low-carbon economy.

“This strategy offers an efficient index-based solution, enabling them to improve their portfolio’s carbon profile and reduce climate risk, while maintaining target returns.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.