UK master trust NEST is planning to switch to a segregated mandate for its ethical fund’s £260m (€299m) equities allocation on the back of member feedback.
The £60bn defined contribution master trust today launched a procurement process for equities component of the mandate, which currently invests some £470m in total on behalf of the members that have actively chosen it; some 98% of NEST’s members are in the default fund.
The pension fund said the growth in the scale and maturity of its ethical investment offering now allowed NEST to consider a segregated, custom ethical mandate, “supporting closer alignment with member preferences, enhanced oversight of ethical policy compliance, and greater transparency”.
Anders Lundgren, head of public markets at NEST, linked the manager search to the outcome of member research that the pension fund conducted last year to “reassess expectations” for the ethical fund.
“Our members told us they want their ethical option to invest in companies that can prove their positive contribution to society and the environment, while maintaining clear boundaries on what’s not acceptable,” he said.
“This market invitation is about finding a partner to deliver this approach at scale while reflecting our commitment to always review our investment arrangements and act in the best interests of our members.”
Colombia Threadneedle has been managing equities and bonds for the ethical fund on a pooled basis until now and will continue to run the bonds component.
According to NEST, the successful bidder for the segregated mandate will need to deliver a broad-based global equity solution “that integrates NEST’s ethical criteria from first principles”.
The deadline for receipt of tenders is 13 March.
Last week NEST, which has around one in three of the UK working population as a member, announced that it had established a “members’ assembly” to guide its sustainability decisions.
The People’s Pension switched to segregated mandates in connection with a recent overhaul of its manager line-up to achieve greater alignment on responsible investment.
