Nest has announced a new climate policy that targets achieving carbon neutrality by 2050, with the scheme announcing plans to invest £5.5bn, or 45 per cent of its portfolio, into climate aware strategies.

The scheme said this would result in £1.2bn being removed from the biggest carbon emitters, adding that this amounted to Nest immediately reducing its carbon footprint by the equivalent of removing 200,000 cars from the road.

Nest also said it would also begin divesting from companies involved in thermal coal, oil sands and arctic drilling, targeting full divestment by 2025 at the latest or the formulation of a clear plan to phase out all related activity by 2030.

The scheme also aims to invest more directly in green infrastructure, to pressure companies to align with the Paris Agreement goals and to commit its fund managers to making progress against set benchmarks.

Nest chief investment officer, Mark Fawcett, said: “As the world’s economy slowly recovers from coronavirus, we want to ensure this recovery is a green one. We have a unique opportunity to support sustainable growth and transition towards a low-carbon economy.

“We believe our new policy sets out a clear vision of where we’re heading. We’ll now work on taking the necessary steps to become net-zero, using our close partnerships with fund managers to amplify our impact and coordinate activities towards meeting the Paris Agreement goals.

“Not only is this the right thing to do, it’s also what our savers want and expect from us. How can we offer them the prospect of a better retirement if we ignore the world they’ll be retiring into?”

The pension scheme, which has nine million members in the UK, made note of survey data released by YouGov in July, which showed that more than three-quarters of adults (79 per cent) said they thought it was important the economic recovery from coronavirus should take climate change into account.

The same research saw just under two-thirds (65 per cent) of pension savers state that their pension should be invested in a way that reduces the impact of climate change, while over half (57 per cent) were worried about the impact of climate change on their lives.

Commenting on Nest’s announcement, ShareAction campaign manager, Lauren Peacock, said: “By committing to engage with companies head on, while moving assets out of high carbon sectors, Nest is setting clear expectations for those most responsible for the climate emergency and demonstrating the power of pensions to move them along a more sustainable path.

“It is vital that engagement moves past disclosure and leads to meaningful change by companies if we are to curtail the climate crisis.”

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