Future of Sustainability

Building a net-zero investment framework and exploring efficient and meaningful ways to meet a net-zero target

Future of Sustainability
Fiona Smith

Robust net-zero plans

Smart Pension partnered with Make My Money Matter (MMMM) earlier this year, committing to achieving net-zero and halving its carbon emissions “well ahead” of the 2050 and 2030 deadlines outlined in the Paris Agreement. In addition, we recently signed up the Institutional Investors Group on Climate Change (IIGCC) to support and progress the solution to climate change. As part of this, we are building our net-zero investment framework and exploring efficient and meaningful ways to meet our net-zero target. Over 70% of our master trust’s default growth fund is now invested in ESG focused funds, as we continue to make real strides on our net-zero journey. We will be looking at how early we can reach a net-zero target, to provide the highest chance of meeting the 1.5°C temperature alignment target. This is likely to include investing in areas that help tackle climate change, rather than removing companies. 

Truly impactful investing

The Smart Pension Master Trust also recently committed to the Impact Investing Institute’s Impact Investing Principles, to help advance the impact investing agenda by considering impact investments in our default investment strategy. We believe impact investing can contribute positively to asset diversification, reducing financial risk arising from negative impacts and providing long-term capital growth, with a positive impact for people and the planet, and will be implementing an allocation to an impact fund shortly.

Strong company engagement

We understand that the transition to a lower-carbon world economy is complex and requires real change in business structures, policies and the fossil fuel industry. Therefore, we do not want to focus on excluding companies or sectors but instead, we will focus on helping to reduce emissions and facilitate active engagement. We recognise exclusions will be used where required, particularly to send strong messages to companies and their leadership, but having a robust engagement and voting process and clear divestment policy is key to making sure we do everything we can to encourage the transition before relying on exclusions.

Harnessing technology

We are excited about our journey to a sustainable future and want our members to feel they can and are making a real difference with their investments. Technology enables us to do this. In particular, it allows us to remove barriers in engaging with members on their pensions, specifically around the power of their investments. We will look to innovative technology to give members a voice, allow them to build investments that represent their views, and provide them information on the real-world impact they are having.

Read more about our sustainable investing approach

About Smart Pension

Launched in 2015, Smart Pension exceeds £5bn 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.