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How we're investing responsibly

Our top priority is to both protect and grow your money, so you get more out of your pension than you put in. With over £45 billion in savings under our management, we’re committed to investing responsibly and sustainably. Here are some of our priorities.

Protecting your pot from climate change

We're all feeling the impacts of climate change.

We’ve experienced more heatwaves, storms and floods. And things are only expected to get worse. According to the United Nations, global temperatures are hitting record levels, fuelled by heat-trapping greenhouse gases and weather patterns causing more dangerous weather and natural disasters, disrupted food production, and rising sea levels which put our coastal areas at risk. 2023 was the warmest year globally since records began in 1850, highlighting the urgent need to address the climate crisis.

The Department for Business, Energy & Industrial Strategy 2024 survey found that 80% of people in the UK are concerned about climate change. We’re concerned too. Climate change will make businesses and our economy less productive. You could retire into a vastly different world, facing higher food costs, extreme natural disasters, and pollution-related health issues. 

That’s why our investment team constantly assesses how to protect your savings from this crisis. By investing responsibly, we stand a chance of changing how businesses and industries around the world operate and contribute to climate change.

We've had a climate change policy in place since 2020 and we're proud of it.

We’re reducing the carbon footprint of your savings

Icon of raised hand with heart inside it

We’ve stopped investing in companies that make most of their sales from certain fossil fuel activities, like thermal coal

We want all the people we invest with to do their part, or we won’t do business with them

We use our voice to influence public policy

Reducing carbon emissions

Rather than waiting for policies to be debated, we’re taking the initiative to stop investing in fossil fuels and work towards net zero emissions by 2050, in line with the Paris Agreement. This means balancing how much greenhouse gas is added to the environment because of your pension against what’ taken away. By reducing emissions, we hope to help limit global warming.

We’re also pushing companies to change so they can thrive in a world that’s not reliant on fossil fuels, often described as a low-carbon economy.  

By acting now, we hope to safeguard your future.

We believe that we all have a role to play in moving towards an economy that doesn’t add more carbon to the atmosphere than it removes. That's why we do not invest in companies that get more than 10% of their revenue from thermal coal production or power generation, or arctic exploration of oil and gas. We believe that these companies will struggle to move quickly enough to operate sustainably and are unlikely to offer a good return for your pension savings in the long-term.

We’re also looking at what opportunities moving towards a low-carbon economy will bring. For example, we’ve formed a joint venture with Octopus Energy and GLIL infrastructure to invest your money in one of the world’s largest offshore wind farms. This wind farm will generate enough green power for over a million UK homes. A huge step towards removing harmful carbon emissions.

Sustainability in the food industry

As the human population continues to increase and our diet changes, the global food industry is rapidly consuming natural resources. It affects the environment on a vast scale, from polluting land and water to threatening wildlife and ecosystems with extinction. The food and agriculture industries are also significant contributors to global greenhouse gas emissions.

Nature’s resources are limited. Experts believe a shift towards more sustainable practices, such as regenerative farming, can help the sector reduce its environmental impact and emissions. And with a rise in awareness spurred by the likes of David Attenborough and Greta Thunberg, eco-conscious consumers join them in calling for change.

The changing food industry

26%*

26% of the world’s greenhouse gas emissions come from food and agriculture production

*Source: Our World in Data

90%*

Over 90% of deforestation is driven by agriculture

*Source: Food and Agriculture Commodity Systems

60%*

Over half of all wild animals, reptiles, birds, and fish have gone extinct since 1970

*Source: World Wildlife Fund

85%*

85% of people have started shopping more sustainably

*Source: Business Wire

So, how can Nest make a difference?

We continue to be a proud member of the Farm Animal Investment Risk and Return (FAIRR) initiative, a network of investors managing over $69 trillion, to push companies like Tesco and Sainsbury’s away from intensive livestock production and unsustainable business practices.

We think this will help protect their future business model, which in turn feeds profits into your pot. It could also open up new sources of revenue as the rising popularity of non-dairy milks like Alpro and Oatly and meat-alternative Beyond Burgers have shown the plant-based alternative market is ripe for success.

Supporting the real Living Wage

Staff should be paid a fair day’s wage for a fair day’s work. This means a wage that accounts for the actual cost of living to ensure that people earn enough to cover their everyday needs, such as food, housing, and other essentials.

This doesn’t just help workers, who deserve to earn a wage they and their families can live on. It also helps businesses. Cardiff Business School found that 93% of Living Wage-accredited companies saw improvements in recruitment, retention, and productivity. It’s one of the reasons we encourage the companies your money is invested in to pay the real Living Wage.

We’ve often focused on the retail sector. Supermarket staff continue to be one of the largest groups of low-paid workers in the UK today.

In 2022 we co-filed a shareholder proposal in the Sainsbury’s annual general meeting in which we asked them to pay the real Living Wage to all workers and contractors. Although the proposal didn’t pass, Sainsbury’s has since increased pay for its London staff to earn the real Living Wage. We’ll continue to push for the Living Wage across all low-paid industries.

We’ve continued to participate in the ShareAction-led Good Work Coalition, which encourages companies to pay the Real Living wage. This wage reflects what people need to earn to cover everyday expenses like groceries, housing, and other essentials. Recently, we signed a collaborative investor letter asking ten UK companies in the retail sector, including Tesco and JD Sport, to demonstrate progress towards paying this wage.

Taking a stand for diversity

Our director of Responsible Investment & ESG integration, Diandra Soobiah, is the chair of the 30% Club UK Investor Group, which calls for FTSE 100 boards to reach parity on gender representation.

Diverse leadership teams continue to outperform

A recent McKinsey & Company study shows that companies that have women on their executive team are 39% more likely to financially outperform those that lack gender diversity7.

It’s a good thing that there are now more female board members across the UK. In fact, over 40% of FTSE 350 board members are now women. This is welcome progress that meets our calls to have at least 40% women on FTSE boards by 2025.

This milestone should help these companies make more money over the years, in turn growing your pension pot. It also helps build a society where our mothers, sisters and daughters can thrive in the workplace.

We stand for more than gender diversity, though. We’re also working on improving racial equity in the UK workforce.This year we participated in ShareAction’s Good Work Coalition. We outlined our expectations to companies that they should capture ethnicity data and publicly report their progress.

Healthy food, healthy profits

Unhealthy foods and drinks aren’t just a significant health risk. They affect our economy too, with obesity costing the UK £98 billion every year, according to the Tony Blair Institute for Global Change.

The government has introduced a raft of proposals to tackle the cost and accessibility of unhealthy food. On top of potential controls on advertising, in-store promotions and more, they must also contend with growing public demand for healthier food.

This changing trend could take a bite out of supermarkets’ profits. We’re encouraging them to get ahead of the curve before their revenue is affected – and therefore your pension pot.

Food manufacturers must play their part too.

At Unilever’s 2022 annual general meeting, we publicly supported a shareholder proposal calling for it to share how much of their food and drink products were healthy or high fat, salt and sugar products, as well as their sales targets for healthy foods. We’re pleased to see positive steps since then. For the first time in 2024, Unilever has begun publishing their annual assessments of the healthiness of its products on a global basis for 16 key markets.

View our latest responsible investment report to learn more about our activities and outcomes.

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