Scottish Widows has announced the launch four funds that aim to drive pension investment into environmentally friendly companies.
The first is Global Environmental Solutions Fund that targets businesses involved in advancing alternative energy generation and supply across a range of sectors such as transport and infrastructure.
The fund only invests in companies that obtain at least 50% of their revenue from goods and services that facilitate sustainable alternatives.
Organisations that target at least 20% of capital expenditure towards businesses, products and services in the circular economy are also suitable for the fund.
The circular economy is a market that give incentives to reusing products, rather than throwing them away and then extracting new resources.
In such an economy, all forms of waste, such as clothes, scrap metal and obsolete electronics, are returned to the economy or used more efficiently according to the UN.
A goal of the fund is to help tackle biodiversity loss through investment and engagement with companies who do so through their own policies.
Schroders helped design the fund and wants to eliminate exposure to commodity-driven deforestation in the companies held in the fund by 2025.
Scottish Widows has also launched three regional equities funds which track decarbonising benchmarks.
The three funds are the Scottish Widows Emerging Markets (EM) Paris-aligned Index Equity Tracker Fund, that tracks the FTSE EM Paris-aligned Index as a benchmark.
The Scottish Widows Developed World Paris-aligned Index Equity Tracker Fund that tracks the FTSE Developed World Paris-aligned Index as a benchmark.
And the Scottish Widows UK Climate Transition Index Equity Tracker Fund that tracks the FTSE All Share Climate Transition Index as a benchmark.
These funds are aligned with the decarbonisation objectives of the 2015 Paris Agreement and will be used as building components for over 80 Scottish Widows multi-asset funds.
These are managed by BlackRock and Abrdn.
Scottish Widows head of responsible investments and stewardship Maria Nazarova-Doyle said: “We recently called for the industry and government to tackle environmental crisis and nature degradation together through joined up, focused action. With the launch of our new fund, we’re taking steps ourselves towards driving major investment into better outcomes for the environment as well as our customers.
“We have an urgent imperative to support the companies attempting to drive the change our planet desperately needs, while protecting the savings and livelihoods of our members in the long run. More innovative solutions are on the horizon, but we must work together to ensure they become a reality.”
