Scot Wids' ESG switch motivated by returns

Scot Wids' ESG switch motivated by returns

Scottish Widows is creating an environmental, sustainable and governance (ESG) framework which will be applied to £170bn of its assets, but it stated this was not motivated by a “moral stance.”

Maria Nazarova-Doyle, head of pensions investments at Scottish Widows, said applying the responsible investment framework was part of a wider toolkit to generate investment returns.

Ms Nazarova-Doyle explained: “An example we have seen recently would be with Heathrow Airport. The extra runway has been blocked on environmental grounds. Investors in the companies that would have benefitted from the runway maybe didn’t consider the environmental impact.

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"We are not trying to take a moral view on this. We will have negative exclusions [that is, not invest in some companies because of the nature of their business] but also we have the scale to actively engage with companies and have them listen to us.” 

The framework, which follows the creation of an ESG team in February, is made up of six principles which will shape decision making on asset allocation, manager selection, fund research and engagement activity.

The framework will be used across all funds managed by Scottish Widows, including workplace pensions. 

Ms Nazarova-Doyle said: “Our role is to keep our customers’ money safe and help them plan for their financial future. Large-scale challenges we are facing today, such as climate change, make our role even more important.

"We must aim to deliver the best possible retirement outcomes for our customers, and that’s at the heart of our responsible investment approach.”

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