Nest has published its responsible investment report today (18 December), announcing that it will be "boosting efforts" to tackle the risks posed by climate change.

The scheme already utilises a Climate Aware Fund (CAF), which increases investment into companies that are seeking to adhere with the UN’s Paris Accord agreement to limit global warming to 2°c, but has now set its own more ambitious target of 1.5°c.

Commenting on the target, Nest head of responsible investment, Diandra Soobiah, said: “Factoring environmental policies into our investment strategy is not only absolutely key to driving better long-term investment results for members but also contributes to global efforts to tackle climate change.

“The climate change risk to both our members and their investments is stark and, frankly, concerning. In good conscience we cannot stand by and do nothing – we want to help ensure the world our members retire in is a world they want to live in."

The schemes members have already invested over £1bn through the CAF, with 22.4 per cent of this reallocated into companies positioned to benefit from a low carbon economy, such as Meridian Energy and EDP renewables.

The scheme is also exploring options to evolve the CAF by rewarding companies involved in the supply chain for providing renewable services, which the scheme notes are both good investment opportunities and crucial in finding broader solutions to reduce carbon emissions.

Soobiah added: “The CAF is one of our key tools to help drive investment into green technology while simultaneously removing investment from the biggest carbon emitters. It’s been successful but we have to go further, reflecting the quickly evolving nature of climate change risk."

The schemes report confirmed that more than £200m has been withdrawn from those companies that need to change but have shown slow or little progress, including companies such as Chevron and Exxon Mobil.

Commenting on the report, Minister for Pensions and Financial Inclusion, Guy Opperman MP, said: "Pension schemes have a crucial role to play in giving their members a planet fit to live on and fit for the future.

“That is why the government has required pension schemes to state how they take account of climate change, and other environmental risks. We are also putting power back into the hands of individuals, giving them the ability to see and decide where their money is going.

“I welcome Nest’s commitments and would urge others to follow their example."

Nest has also announced that it is the latest signatory to Climate Action 100+, joining over 370 investors already signed up.

This also follows Nest’s complete divestment from Tobacco, announced in June this year.

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