How we're investing responsibly

 How we're investing responsibly

No one will forget 2020, the year our world changed beyond recognition. Stock markets fell, our economy slipped into recession, society shifted overnight. As we’ve adjusted to our new normal, 88% of Britons said they wanted a fairer, kinder, more equal world – one that leaves people and the planet better off.

Our immediate priority is to protect your pot, so you get more out of your pension than you put in. We do that through investing responsibly and sustainably. Here are some of our latest highlights.

Kickstarting our economy after Covid-19

Many companies have struggled to keep afloat as lockdown has affected their usual sources of revenue. Investors have worked to bridge the financial gap these companies are facing, leading to a new type of sustainable lending – Covid-19 bonds.

Buying Covid-19 bonds allows us to finance projects, companies and industries that directly tackle issues caused by coronavirus, such as medical research or loans to generate jobs and save small businesses. Not only do you pocket the rewards from these bonds, you’re also helping support the UK’s economic recovery.

We’ll continue to look for new ways to invest your savings as the pandemic develops. Right now, your Covid-19 bond money is going to hospitals, nursing facilities and making health care equipment and supplies.

Icon of woman with person in wheelchair

Protecting your pot from climate change

A global crisis recently shocked the world. Thousands died, people were afraid to leave their homes and our economy ground to a standstill. Millions are being pushed into poverty as a result. We are, of course, talking about coronavirus. In a few decades, we could just as easily be describing the next emergency on our horizon: climate change.

But this time, there won’t be a vaccine to treat it.

Our investment team constantly assesses how to protect your savings from this looming crisis. After years of hard work, we’re proud to announce our climate change policy.

Icon of plant leaves

We’re making our whole porfolio greener

Icon of raised hand with heart inside it

We’re committing to the Paris Agreement

Icon of avatar with tick

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

Icon of megaphone

We’ll use our voice to influence public policy

Nearly 60% of Britons want the government to prioritise climate change as we rebuild our economy. Rather than waiting for policies to be debated, we’re taking the initiative to stop funding the most harmful fossil fuels, push companies to align with the Paris Agreement and much more.

Climate change could make businesses and our economy less profitable, in turn shrinking your pension pot. You could also retire into a vastly different world, facing higher food costs, extreme natural disasters and pollution-related health issues. By acting now, we hope to safeguard your future.

See how we’re tackling climate change.

Sustainability in the food industry

As the human population explodes 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.

However, nature’s resources are limited. Experts believe a shift towards greener practices is one of the only ways the sector can be profitable in the years to come. And with a rise in environmental awareness spurred by the likes of David Attenborough and Greta Thunberg, eco-conscious consumers join them in calling for change.

Icon of sustainability in food industry

15%

15% of greenhouse gas emissions come from livestock production - more than the

transport sector

13bn

13bn hectares of forest cut down for agriculture every year

50%

Half of all wild animals have gone extinct in the last 40 years

Icon of sustainability in food industry

8m

8m tonnes of plastic used in food and drink packaging in Europe

in 2018

52%

52% of consumers think companies are most responsible for protecting the environment

73%

73% of Millennials say they’d spend more for sustainable products

So, how can Nest make a difference? We’ve joined the FAIRR Initiative, a network of investors managing over $23 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.

Cutting your carbon footprint

We set up our first climate-aware fund in 2017 to move money away from heavy polluters and into greener, sustainable investments. It’s performed so well that we’re now investing all our developed equities through climate-aware strategies, making it a win for your pot as well as your carbon footprint.

Our climate-aware funds have helped reduce our members' carbon footprint by the equivalent of:

  2018 2019 2020

Cars taken off the road

27,239

49,834

236,561

Homes powered for a year

6,248

11,430

54,258

Tonnes of waste

stopped from going to

a landfill

14,524

26,572

88,507

Barclays commits to net-zero carbon

In February 2021, we took the unusual step of publicly pre-announcing our support for a shareholder resolution at Barclays. ShareAction, a sustainability charity, had called on the bank to set concrete targets to tackle climate change.

We discussed the resolution with the Chair of Barclays, who acknowledged that the bank needed to do more. By the end of March, Barclays formally announced their commitment to be a net-zero bank by 2050, in line with the Paris Agreement. It’s further proof that when shareholders stand together, we can drive positive change across companies and industries alike.

Taking a stand for diversity

We’re a member of the 30% Club, which calls for at least 30% representation of women on company boards around the world. That’s not just because we believe in equal rights.

Icon of woman sitting at desk

10x profits

Research into London-listed companies shows that organisations where at least 1 in 3 bosses are women make over 10 times as much profits as male-dominated firms.

We’re thrilled that our support has helped make a difference. As of February 2020, 33% of FTSE board members are women. This milestone should help companies create profits for your pot, while also building a society where our mothers, sisters and daughters can thrive in the workplace.

We stand for more than gender diversity though. The powerful Black Lives Matter movement has led to people confronting and challenging systemic racism in society, and we’re applying these learnings in our own field. Nearly 40% of FTSE 100 companies have no directors of Black, Asian or other minority ethnic background on their boards at all. That’s just not good enough. We’re asking companies to disclose both gender and ethnic diversity of their workforce, including any pay gaps. If we see a poor track record in any of the companies we invest in, we’ll push for change.

After all, money talks. And with over £21.6 billion of our members’ savings under management, we can make your money shout.

Healthy food, healthy profits

Obesity isn’t just a significant risk factor for Covid-19. It affects our economy too. Every year, we spend more treating obesity and diabetes than on the police, fire service and judicial system combined.

The government has publicly declared war on obesity, with a raft of proposals to tackle the cost and accessibility of unhealthy food. And with £2 in every £3 spent on food in the UK going to a handful of supermarkets, it’s clear who’s on the frontline of any change in regulation. 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.

Tobacco

After first announcing our decision back in 2019, we’re delighted to announce that Nest’s investment portfolio is completely tobacco-free, a whole year ahead of schedule.

Tobacco has faced a rise in government regulation due to its impact on health, making the sector much less lucrative. News that hundreds of thousands of people have quit smoking due to coronavirus suggest that global smoking rates will continue to plummet – alongside tobacco companies’ profits. It’s further proof that the industry isn’t sustainable, so we’re delighted that your money has been invested in other sectors.

Icon of smokers standing together

1m quitters

41% of 1 million smokers quit in direct response to coronavirus