Sustainable investing

Investing sustainably is great for you, society and our planet.

Most people don’t know where their pension contributions go when they pay them each month

Some think their money sits in a Smart Pension bank account, waiting for it to be withdrawn at retirement. However, we invest money in companies and funds which aim to earn more money than if the money was sitting in a bank account.

However we don’t just look at the financial aspect of where we invest, we increasingly invest money in companies that do things to help society and our planet.

An industry term that explains this approach is ‘ESG investing’ which stands for Environmental, Social and Governance. This means when investing, we take into consideration factors ranging from the Environmental impact with the aim to protect the planet, Social impact - looking at issues affecting fair treatment of people and Governance which considers the way companies are run. Read our climate policy to learn more about our investment strategy using an ESG index.

Sustainable investing means we aim to generate financial returns on pension savings so that you can have a more comfortable retirement, and do so in a way that will positively impact society and our planet.

Lots of us don't know the impact our pension savings have on the world

Our sustainability explainer helps our members understand how the decisions they make with their pension savings may impact the wider world.

Our sustainable investment approach

We look to invest with a conscience, while growing members’ savings. We believe that we can help you to create a world that we all want to retire in – supporting profitable companies that build a sustainable, safe and stable future for society and our planet.

1. Investing sustainably

We invest in sustainable funds which are funds that invest relatively more in companies with strong environmental, social and governance (ESG) credentials, and less in those who are doing less well in these areas. Our default investment strategy initially invests members’ money in the Smart Growth - Moderate Risk Fund, which has over 70% of all investments in specific sustainable funds. Over 90% of members are in our default investment strategy which means the majority of our members are helping to create positive change in the world.

If you want something more specific to your own beliefs, you can also choose to invest in one of our other funds:

  • the Smart Ethical Global Equity Index Fund invests in companies that meet certain ethical criteria
  • the Smart Sharia Fund complies with Islamic investment principles

2. Investing in impact funds

The trustees have committed to invest up to 6% in impact funds to make a real difference to the communities that we live in. Examples of these types of investments are projects or businesses that benefit the local community, such as social housing or renewable energy.

3. Our net zero target

We are targeting a net zero emissions portfolio before 2050 in order to support the Paris Agreement that aims to tackle climate change. It's goal is to limit global warming by well below 2C, and preferably 1.5C. Innovation is part of our DNA, and our approach to sustainable investing in your pension is no different. By signing up to Make My Money Matter and Institutional Investors Group on Climate Change (IIGCC), we are pledging to go faster and make changes well in advance of 2050. Read our climate policy to learn more about our approach to climate change and our investment strategy using an ESG index.

4. Sustainable investing is a key focus for our trustees

Every investment we make is made in line with the strong Responsible Investment Policy set by the trustees. The trustees are committed to being engaged in sustainable investing and they undertake regular training to remain informed and continue to offer the latest innovative investing approaches. They are supportive of  the UK Stewardship Code and the Trustee is a signatory to the UN-supported Principles of Responsible Investment (PRI). The PRI encourages the investment industry to be responsible for its actions. It also encourages signatories to share and build on best practice.

5. Exploring new ways to innovate

We were one of the first master trusts to decide the majority of our default growth investment fund should be made up of sustainable funds. We have added an allocation to private credit and we expect to be the first to include impact investing too. We’re always looking to the future at how we can improve our investment approach.