Scottish Widows Achieves Climate Goal Ahead of Time with £1bn Environmental Investment Initiative

12 Jul 2023

Scottish Widows, an organization that provides pensions, has attained its primary goal concerning climate change earlier than its projected 2025 completion date. This accomplishment was enabled by the firm's £1.3bn investment in climate solutions.

The company's annual Responsible Investment and Stewardship Report has revealed the leading insight, which was a thorough assessment of the voting patterns of the principal fund and asset managers and an inspection of how the firm's worldwide portfolio is associated with deforestation-related risks.

The company disclosed putting £17.5bn of its £25bn objective for 'climate-aware' strategies into practice, following a £12bn investment in 2022. This leaves more than two years until its 2025 deadline.

In the past year, £328m was invested into green initiatives from housing associations for retrofitting and energy efficiency betterment, while £30m was invested in electric bus company Zenobe. This is part of a major 'climate aware' investment.  

The investor assessed their investments regarding their involvement in deforestation-related matters over the previous year.

£124bn of corporate assets were analyzed, and it was concluded that 12% of exposure was accounted for by companies classed as 'high-risk' for deforestation. Adding the banking sector to the same assessment led to a higher proportion of 28%. Scottish Widows stated that they aim to identify targets to interact with to strengthen their efforts to combat deforestation-related activity within their portfolio.

In the future, Scottish Widows intends to extend its analysis of deforestation exposure to include other environmental indicators to gain a comprehensive understanding of the risks associated with its portfolio.

The latest report by Scottish Widows delves into the voting behavior and participation in Environmental, Social, and Governance (ESG) matters amongst its main asset supervisors in the past year, noting any occasions where the expectations on crucial matters still needed to be met.

This Autumn, Scottish Widows is convening a meeting with its main managers and several other UK pension funds to address their worries about the compatibility of their voting positions.

The company declared that the event should signify the inaugural collective interaction exercise led by an asset owner group to its asset managers instead of the investee firms.

Before the gathering, the pensions supplier declared that it had asked its directors to give special care to any changes to its voting rules after it modified its main themes in the previous year to more adequately handle environment-related dangers.

Scottish Widows announced an update to their theme entitled 'Climate and Environment' instead of 'Climate and Carbon.' They stated this theme is more centered around nature.

Maria Nazarova-Doyle, head of responsible investments and stewardship at Scottish Widows, expressed satisfaction with the progress made in the past year in conjunction with the investment managers. However, she noted that further measures are needed to ensure that practices remain aligned with the established guidelines, especially considering the alterations in the thematic focuses.

The basis of any prudent investment strategy is maintaining good management practices, which helps to maintain and augment long-term value for our clients.

Source: Sustainable Times, Hammaad Saghir