Standard Life has completed embedding a range of responsibly invested, sustainable multi-asset funds for its 1.5 million workplace pension scheme members, with assets of circa £15bn now invested in sustainable solutions on their behalf.

The workplace pensions provider’s ambitious programme to introduce sustainable investment strategies designed to help employers and trustees meet their member and regulatory needs, and pension customers achieve good outcomes, has been completed two months earlier than the end of year timeline previously announced in January 2022.

The programme was executed in a number of distinct phases starting with the adoption of a sustainable multi-asset solution for 87,000 members of the Standard Life Master Trust in February 2022, followed by the transition of 1.2 million members in the Active Plus and Passive Plus III Growth Pension Fund, and £11.4bn in assets, to a sustainable multi asset responsible investment solution.

The programme successfully concluded in October when approximately 200,000 members invested in Active Plus and Passive Plus I, II, IV, and V fund ranges switched into responsible investment solutions. This completed the strategy to establish responsibly invested, multi-asset funds as the defined contribution (DC) default solution for existing pension savers.

Similar sustainable solutions were introduced for new members in 2020.

Gail Izat, workplace managing director at Standard Life, said: “We set out to offer an outcomes-based, future proofed responsible investment proposition not just for new joiners to workplace schemes but for those who have been loyally saving with us for many years too. It’s been a massive undertaking to successfully implement the switch of over 1.5 million existing members and transfer £15bn in assets to our sustainable multi-asset investment solutions.”

With the aim of accelerating investment growth in the early years, Standard Life has increased the responsible investing content of the growth fund in its Sustainable Multi Asset Universal Strategic Lifestyle Profile which integrates clear ESG targets designed to manage pension growth through positive outcomes.

These include a 50% reduction in carbon emissions, screening out of controversial weapons, tobacco production, thermal coal and unconventional oil and gas, while also driving positive change through increased stewardship and the expertise of a dedicated team of ESG stewardship and investment specialists.

The fund’s increased equity exposure, targeting good customer outcomes, is underpinned by ESG components of up to 79%, with an ambition to extend it further by the end of the year.

Legal & General Mastertrust issues first TCFD report

Legal & General has published its first Task Force on Climate-related Financial Disclosures (TCFD) report for its L&G WorkSave Mastertrust, reporting positive progress made towards delivering net zero alignment across the master trust’s default funds by 2050.

The report outlines meaningful carbon footprint reduction across the master trust’s standard auto-enrolment default funds. From 31 December 2019 to 31 December 2021, the master trust’s Target Date Fund ‘growth phase’ reduced its carbon footprint by more than 50%, along with a 25% reduction across the Future World Multi-Asset Fund and a 23% reduction across the Multi-Asset Fund.

As at the end of 2021, the Target Date Fund ‘approaching retirement’ and ‘retirement’ phases achieved reductions in carbon footprint of 46% and 39%, respectively. The Retirement Income Multi-Asset Fund (RIMA), which forms the end of the default drawdown lifestyle, achieved a 23% reduction.

In addition to these figures, the report outlined the further actions taken across the L&G master trust to address the material financial risks posed by climate change and take advantage of opportunities in the climate transition, with progress including:

  • the integration of climate risk and opportunity into the master trust’s risk and governance framework;
  • the completion of a scenario analysis of popular strategies across three global warming scenarios – limiting global warming to 1.5°C, limiting global warming to well-below 2°C reflecting an immediate ambitious investment action, and limiting global warming to well-below 2°C but reflecting delayed and disorderly action with much more disruptive change;
  • identifying and reporting on four key climate metrics – total carbon emissions, carbon footprint, temperature alignment and climate engagement.

Taken together, these actions aim to deliver on the board of trustees’ roadmap for net zero by 2050, which sets interim targets for the reduction of the carbon emissions intensity across the master trust’s default funds.

Dermot Courtier, the master trust’s chair, said: “Climate change is one of the world’s most significant challenges and addressing it is a key responsibility for this generation. Scientific evidence indicates that we need to act now to reduce carbon emissions to avoid disastrous consequences for our environment, our society, and our economies.”

This year’s TCFD report covers the reporting period from 1 October 2021 to 5 April 2022, reflecting the date at which the Occupational Pension Schemes Climate Change Governance Reporting Regulations 2021 introduced new reporting requirements in line with the TCFD recommendations to the master trust’s year end.

Going forward, the master trust’s trustees will publish this report annually, updating members on the fund’s pathway to net zero. The L&G WorkSave Mastertrust is one of the largest authorised master trusts in the UK market, looking after the retirement savings of 1.64 million members.

Aon wins fiduciary advice contract for Russell & Bromley scheme

The trustees of the Russell & Bromley Limited Pension and Life Assurance Scheme have selected Aon to provide fiduciary management services in the UK.

Russell & Bromley, the luxury shoes and handbags retailer with 32 stores around the UK and one in the Republic of Ireland, has a £30m pension fund with around 240 members. Aon was selected following a competitive tender process.

Andrew Bromley, chair of trustees of the fund, said: “The Aon team showed the best understanding of our needs and objectives. Their approach was the most flexible and adaptable, so we are confident that it can perform well in a wide range of market conditions. In particular, Aon’s use of active diversifiers gives us confidence that they will generate strong returns when markets are rising and provide robust protection when markets are falling.”

Tony Baily, partner at Aon Investments, said: “Aon’s fiduciary management approach can help the Russell & Bromley scheme navigate these times of increased volatility. Financial markets will always be complex and uncertain. However, with Aon’s fiduciary management, the scheme can be sure of having the right strategy to achieve its goals, and sleep easy in the knowledge that we are actively managing its assets to deliver the growth and protection needed.”

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