The UK’s new workplace pensions system NEST, potentially one of the largest asset owners in Europe, has become a signatory to the UN-backed Principles for Responsible Investment.
In addition it will boost its responsible investment efforts with the appointment of a responsible ownership overlay specialist provider and environmental, social and governance (ESG) data provider later this year. NEST added it is also committed to becoming a signatory of the Stewardship Code.
NEST, the National Employment Savings Trust, is a new low cost pension scheme set to be introduced from 2012. Aiming to compensate for the estimated 750,000 companies who don’t offer pensions, NEST could potentially grow into a multi-billion-pound asset owner.
NEST said factoring in ESG issues across all asset classes and markets – where possible – is in its members’ interests.
“NEST believes that to protect and enhance the value of investments over the long term, it must act as a responsible asset owner and market participant,” said Chief Investment Officer Mark Fawcett.“We also believe that investing responsibly enhances long-term value and reduces risk, and we have therefore embodied this view within our investment beliefs.”
“In coming years, NEST will become one of the most important asset owners in the UK pension fund industry, and we are delighted NEST has decided to become a signatory,” said PRI Chair Wolfgang Engshuber. He said NEST was leading by example.
The scheme will exercise its voting rights via its fund managers – who include UBS Global Asset Management, State Street Global Advisors and BlackRock – and will “actively engage” with its investee companies.
NEST has already started formally assessing the capabilities of the external managers to incorporate ESG.
Earlier this year, NEST awarded Ethical and Sharia Mandates to F&C Asset Management and HSBC Global Asset Management respectively.
NEST is already facing competition from Danish pension giant ATP, which unveiled its NOW Pensions initiative last month.