Aviva has launched a workplace pension default investment strategy based on funds aiming to provide portfolios that are “socially, ethically and environmentally sound”.
The lifestyle strategy is based on ‘Stewardship’ funds that Aviva launched in 1984 and, according to the insurer, were the UK’s first range of ethical funds.
It is the first time a strategy has been based solely on these funds, it said.
The stewardship funds exclude companies that do not meet certain ethical standards or that harm society or the environment, such as companies with “a significant involvement” in tobacco, pornography or coal mining.
On top of this, the Aviva Investors team behind the funds engage with companies “to improve how they conduct their business”.
Because the funds were established for customers “who care about more than simply investment returns”, Aviva also monitors and reports various environmental, social and corporate governance metrics, such as the proportion of companies with initiatives and targets in place to reduce carbon emissions.
The majority of the funds are invested in UK equities, according to an investment policy document.
Employers that have their workplace pension scheme with Aviva will be able to use the lifestyle strategy as their default but also offer it as an alternative.
Steve Waygood, chief responsible investment officer at the asset manager, said: “As a result of auto-enrolment and the boom in pension saving, more and more people are now investors. Their hard-earned savings can be used to make the world a better place.”
For various reasons, including regulation, ESG-related investing is gaining increasing attention from UK defined contribution (DC) pension schemes and providers. Several have allocated to ESG-related strategies for their default funds.
Master trust The People’s Pension is rolling out an expected £1bn (€1.1bn) investment in a multi-factor fund aiming to reduce exposure to fossil fuels. It is separately surveying members’ views on environmental, social or corporate governance issues, including pay inequality, packaging and waste, board diversity, data security, and climate change.
NEST, Willis Towers Watson’s LifeSight vehicle and Legal & General’s UK DC master trust have also allocated to ESG-related strategies for their default funds. Schroders last year launched a sustainable equity factor-based fund targeting the UK DC sector.
A recently publicised survey found that DC scheme members overwhelmingly supported responsible or ethical investment being part of their default fund, although the term “ESG” was unpopular with them.