UK workplace pension scheme NEST considers ESG in emerging markets fund search

Defined contribution scheme issues tender

NEST, the new low-cost UK defined contribution workplace pension scheme, is seeking a global emerging markets equity index-tracking fund – adding it will consider those which apply an environmental, social and governance (ESG) screen.

NEST, the National Employees Savings Trust, announced it is looking to procure two emerging markets (EM) funds to use as building blocks in its default retirement date funds and in other fund choices “as appropriate”.

The London-based body is looking to procure a global emerging markets equity index-tracking fund and an alternative index global emerging markets fund.

It said: “For the global EM equity index-tracking fund, we will consider any established, well-constructed EM equity index, including those applying an environmental, social and governance (ESG) screen.”

For the alternative index global EM fund, NEST is looking for funds that feature a ‘value’ style bias.Chief Investment Officer Mark Fawcett said the mandates would allow NEST “to further access an asset class with the potential to deliver good growth for our members as well as greater scope for diversification”.

NEST is committed to integrating ESG across all asset classes and markets where practical. In particular NEST says it will exercise ownership rights, including voting and engagement rights, in order to protect members’ interests. It is a signatory to the UK Stewardship Code, the Principles for Responsible Investment and an affiliate member of UK Sustainable Investment Finance (UKSIF).
NEST, which is expected to grow to millions of members and billion in assets under management over time, currently offers NEST Retirement Date Funds (NRDFs), 47 single year target date funds and five fund choices (Higher Risk Fund, the Lower Growth Fund, the Ethical Fund, the Sharia Fund and the Pre-retirement Fund).
The tender closes on November 29.