Scottish Widows invests £2bn in BlackRock low carbon transition fund

Scottish Widows has invested £2bn of its pension portfolios in BlackRock’s newly launched fund designed for the transition to a low carbon economy.

The pension provider helped design the Authorised Contractual Scheme (ACS) Climate Transition World Equity Fund and has become its first investor.

‘Climate Transition’ is a new data-driven investment approach developed by BlackRock that measures a firm’s exposure and management to transition risks and opportunities.

It seeks to provide investors with a “broad market approach” to invest in the transition to a low carbon economy.

BlackRock said that the strategy reflects investors’ increasing demand for solutions assessing climate-related risks and opportunities.

“The world is undergoing a rapid transition to a low-carbon economy,” said BlackRock vice chairman, Philipp Hildebrand.

“This transition — driven by climate change, technological innovation, consumer preference and regulatory and policy development — is going to create winners and losers, and investors need to be prepared.

“With an investment strategy developed to seek to identify global opportunities and risks at an early stage, the fund is designed to help investors benefit from this historic shift while also contributing to positive environmental outcomes.”

The fund’s investment approach has a framework that aims to translate low carbons risks and opportunities into five ‘pillars’: energy production, clean technology, energy management, water management and waste management.

BlackRock will score each company’s management of the pillars into a single assessment, relative to their peers.

The fund excludes controversial and nuclear weapons; civilian firearms producers and where revenues are >5 per cent; UN Global Compact breaches; exposure to tar sands and thermal coal where revenues are >5 per cent.

Commenting on the investment, Scottish Widows head of pension investments, Maria Nazarova-Doyle, said: “Offering customers more sustainable investment choices, and challenging companies in which we invest to behave more sustainably and responsibly, is a central part of our strategy.

“Our work with BlackRock to design this new fund, together with our significant investment, will help to engender positive change in the industry; incorporating environmental, social and governance risks into a portfolio can have a meaningful financial impact on performance.”

    Share Story:

Recent Stories

Climate Investing
Laura Blows speaks to Aled Jones, Head of Sustainable Investing for Europe at FTSE Russell, and Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, about the role of climate investing within a pension fund portfolio.

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions