UK’s biggest private pension fund to shift £5bn away from polluters
The UK’s biggest private pension fund will shift £5bn of its investment in equities to an index avoiding the worst polluters, in a move that will immediately reduce the carbon emissions associated with the shareholdings by 30%.
The Universities Superannuation Scheme (USS), which manages the pensions of British academics, will introduce a climate “tilt” to the money, shifting it to companies that are making efforts to cut emissions.
USS owns assets worth £82bn on behalf of 470,000 members from 330 of the UK’s higher education institutions, of which 40% is held in equities. It is facing pressure from members to decarbonise, as well as a separate dispute over proposals to cut pension benefits that could lead to strike action.
The £5bn stake will move to Legal & General Investment Management (LGIM), which will invest it according to a climate transition index developed by Solactive, a German company. The passively held investments have previously been managed by BlackRock, the world’s largest asset manager, to reflect indices by MSCI. The move will also cut management costs.
As well as the initial 30% fall in emissions associated with the investment, Solactive will ensure that portfolio carbon emissions fall by 7% every year thereafter. Crucially, this calculation will take into account emissions associated with companies’ products, such as oil or gas sold by fossil fuel producers.
“We think this is a significant first step,” said Simon Pilcher, the chief executive of USS Investment Management, which manages the pension scheme’s money. “We are committed to the ultimate decarbonisation of the total assets.
“Our conviction though is that for that total decarbonisation to happen, it is the underlying companies and the way in which
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