Scottish Widows is calling for all its asset managers to become signatories to the UK Stewardship Code, as the provider – which handles around £190bn (€220bn) of pensions, savings and investments for around six million UK customers – doubles-down on its commitment to create long-term benefits for savers.

The call comes as part of the company’s 2021 Stewardship Report, published this week, which outlines Scottish Widows’ ESG activities over the 2021 calendar year, including:

  • its pledge to make £20-25bn worth of climate-aware investments by 2025, including at least £1bn directly into climate solutions;
  • the company’s relaunch of its Environmental Fund to be fully fossil-fuel free, upping its focus on having a positive environmental impact and announcing new steps to harness cognitive diversity across its portfolio;
  • a collaboration with academics from the University of Bath on a milestone report looking into cognitive diversity on company boards - ‘Great Minds Don’t Think Alike’

Scottish Widows’ responsible investment work over 2021 culminated in the launch of its Climate Action Plan at the start of 2022, becoming the UK’s first major pensions and insurance provider to clearly define its strategy for long-term decarbonisation and a net-zero portfolio by 2050.

Later in Q1 2022, it announced a new update to its £3bn exclusions policy, divesting from any company deriving more than 10% of its revenue from tobacco.

In 2021 Scottish Widows also achieved signatory status to the Financial Reporting Council (FRC)’s Stewardship Code.

Maria Nazarova-Doyle, head of pension investments and responsible investments at Scottish Widows, said: “When done well, stewardship policies can be the key to making large-scale, positive impacts in the real world – from slashing global emissions and championing workers’ rights, to delivering affordable social housing for the disadvantaged.

“We have a responsibility to continue finessing our stewardship approach to reflect the increasing need for active ownership of businesses throughout the world to enable them to become more sustainable.”

LGIM launches net zero bond fund

Legal & General Investment Management (LGIM) has launched the L&G Net Zero Global Corporate Bond Fund, targeting institutional investors and wealth managers across the UK and Europe.

The fund aims to identify long-term financial alpha across a broadly diversified global credit universe while targeting net zero emissions by 2050, as well as to provide improved portfolio temperature alignment through decarbonisation objectives and enhanced long-term outcomes through meaningful engagement with the companies in the portfolio, it was announced.

By measuring the climate risk embedded in the portfolio and its climate alignment, as well as drawing on the energy transition scenario insights of LGIM’s proprietary climate risk framework, the investment fund adopts a progressive approach to reducing carbon emissions intensity, known as the fund’s “pathway” to net zero.

Its ultimate goal is to achieve 1.5°C temperature alignment by 2030 and net zero emissions by 2050. The fund is led by co-managers Matthew Rees and Enda Mulry.

The fund also relies on LGIM’s scale and influence to engage companies and policymakers through its “Climate Impact Pledge”, a programme of engagement with the largest companies across the sectors identified as key to meeting the ambitious Paris Climate Agreement targets.

Its investment process is underpinned by LGIM’s global research and engagement groups, which bring the firm’s equity, credit and investment stewardship teams together.

Rees, LGIM’s head of global bond strategies, said: “In their search for yield, investors are looking to access a well-diversified global credit universe that will provide them with an array of opportunities. At the same time, they want to invest in portfolios that enable them to achieve net zero emissions in line with the Paris Alignment trajectory, as well as reach better ESG outcomes.”

He noted that this fund has been specifically designed to help investors achieve alpha generation, as well as positive climate and wider ESG objectives.

Edmond de Rothschild plans to join Net Zero Alliance Asset Managers initiative

Asset management Group Edmond de Rothschild has announced it intends to join the Net Zero Alliance Asset Managers initiative before the end of 2022, as it published its 2021 sustainable development report.

The report confirms the group’s convictions and priorities facing environmental and societal challenges and reaffirms its commitment to putting finance at the service of the real economy, it stated.

Edmond de Rothschild is pursuing its commitment to invest in innovative economic and social models, to develop a long-term culture and to cultivate a desire for positive change and impact, it added.

“That is why, again this year, our commitments to sustainable finance are designed to support the transition to more sustainable economic models and to take action on the environment, agriculture, infrastructure, sustainable development and education. We use investment in all its forms to transmit a more sustainable world,” the firm stated.

The group claimed it has achieved significant progress in responsible investment, for instance, where it has seen a 100% increase in the number of SRI mandates in private banking as well as a 45% increase of assets in real estate portfolios managed with a sustainability policy.