As one of the UK’s leading Defined Contribution (DC) master trusts, we are proud to announce that our default growth fund is now entirely invested in funds that promote good environmental, social and governance (ESG) practices.
This is great progress towards our commitment to making our default growth fund net zero by 2040, and to have halved the fund’s carbon emissions between 2019 and 2025.
Since 2019, we have steadily made our default growth fund, used by over 90% of our members, more focused on sustainable investments, by actively increasing the fund’s specific focus on ESG issues.
All of the underlying investment funds that now make up our default growth fund are rated as being Article 8 or 9 investment funds by the EU’s Sustainable Finance Disclosure Regulation, a technical standard recently introduced by the European Commission. Putting the Smart Pension Master Trust at the forefront of the industry from a sustainability perspective, this means our investments are predominantly tilted towards companies with strongly evidenced ESG credentials, such as those that are fighting climate change and investing in sustainable agriculture and renewable energies.
The news comes after Smart Pension announced a biodiversity partnership with AXA Investment Managers, with the aim of bolstering Smart Pension’s investments into decarbonisation and companies that are addressing biodiversity loss.
In October 2021, Smart Pension signed up to the Institutional Investors Group on Climate Change and we also committed to the Impact Investing Institute’s Impact Investing Principles, to support and progress our investment solutions in light of climate change. The Smart Pension Master Trust also invests into a private credit fund whose investment decisions are grounded in ESG principles, and provides rare access to this asset class in DC pension schemes.
In June 2022, we announced that our default growth fund will be net zero by 2040, and is on track to have cut emissions by 50% between 2019 and 2025.
Commenting on the milestone, Chief Investment Officer at Smart Pension, Paul Bucksey, said:
“We want our members to get the most out of their pension savings and to enjoy a comfortable retirement in a healthier world. Three years ago, we set out to incorporate more and more investments with a strong sustainability focus into our portfolio. We’re so glad to have now reached the milestone of our default growth fund being fully invested in ESG rated funds – up from 70% this time last year. Along with our other sustainability efforts, this means we are firmly on track to achieve our 2040 net zero target.”
Jamie Fiveash, Chief Executive Officer UK at Smart said:
“We are excited about our journey to a sustainable future and we want our members to feel they are making a real difference with their investments. It is really important to us at Smart Pension that our investments have a positive impact on people and the planet, but we also believe that investing sustainably can contribute positively to asset diversification, reduce financial risk, and provide long-term sustainable capital growth. Achieving an Article 8 or Article 9 rating for all our default fund’s components is a great sign that we are making good progress towards our sustainability pledges."
Read more about what Article 8 and 9 mean here.
Launched in 2015, Smart Pension exceeds £4bn in assets under management (AUM) and now serves over one million members and more than 70,000 employers. It is powered by Keystone, Smart’s global savings and investments technology platform.
Aquiline Capital Partners, Barclays, Chrysalis Investments, DWS Group, Fidelity International Strategic Ventures, J.P. Morgan, Legal & General Investment Management, Link Group and Natixis Investment Managers are all investors in Smart Pension.