The People’s Pension removes £226m from businesses that fail to meet its ESG standards
Leading workplace pension scheme, The People’s Pension1 has today announced that it has removed investment in companies worth up to £226m from its funds because these businesses have failed to meet its rigorous ESG (environmental, social and governance) standards2.
The workplace pension scheme has worked closely with its fund manager, State Street Global Advisors (SSGA)3, on the policy which led to the initial removal of approximately 150 stocks from its portfolio.
The divestment targets controversial weapons companies as well as organisations linked to severe controversies involving human rights, labour, environment, and corruption. Such companies are deemed to present some of the most severe types of ESG-related investment risk4.
Jon Cunliffe, managing director of investments at B&CE, provider of The People’s Pension, said:
“We’ve taken the significant step of divesting from companies which fail to meet our ESG standards because of the risks they pose to member accounts and the reputation of the scheme.
“As engagement with companies which flagrantly breach good practice is unlikely to work, we have removed investments from these holdings, in the best interest of our members.
“Both SSGA and our Trustees have worked very hard to get to this point, and we know that this decisive action will have the support of our members as our polling tells us that responsible investment is important to them.
“These exclusions underline our commitment to being a responsible investor, which we put at the heart of our decision making2.”
Alistair Byrne, managing director, head of retirement strategy at State Street Global Advisors, said:
“ESG considerations are an increasingly crucial aspect of the investment strategy of any pension scheme. We are delighted to have been able to work with The People’s Pension to design and implement these changes, creating a more robust and sustainable default fund for their millions of members. We look forward to continuing our collaboration to evolve the ESG strategy of the scheme.”
Notes to editor
- The People’s Pension is a leading workplace pension scheme from the not-for-profit B&CE Group, with more than five million pension savers and £16 billion assets under management.
- More information on our Responsible Investment Policy can be found here: https://thepeoplespension.co.uk/responsible-investment/
- For four decades, State Street Global Advisors has served the world’s governments, institutions, and financial advisors. With a rigorous, risk-aware approach built on research, analysis and market-tested experience, they build from a breadth of active and index strategies to create cost-effective solutions. As stewards, they help portfolio companies see what is fair for people and sustainable for the planet can deliver long-term performance. And, as pioneers in index, ETF and ESG investing, they are always inventing new ways to invest. As a result, they have become the world’s third-largest asset manager with US $3.90 trillion* under their care.
- ESG Controversy Score (“Red Flags”) Securities of companies having faced very severe controversies pertaining to ESG issues are not eligible for inclusion in the Index. This is implemented by excluding constituents of Parent Index with MSCI ESG Controversy Score = 0 (“Red Flag” companies). The MSCI ex Controversial Weapons screens exclude companies involved in; Cluster Bombs, Landmines, Depleted Uranium Weapons, Chemical and Biological Weapons, Blinding Laser Weapons, Non-Detectable Fragments and Incendiary Weapons (White Phosphorus). The FTSE Russell ex controversies ex controversial weapons screens exclude companies involved in chemical & biological weapons, cluster bombs, and landmines, as well as companies linked to controversies involving human rights, labour, environment and corruption.