Putting money where it's fit for the future

A large proportion of these investments take the form of shares in companies that operate around the world and are listed on stock markets outside of the UK, such as Apple or Microsoft. 

Until you’re seven years away from your target age (the age you think you’ll start drawing from your pension pot), we aim to invest around three-quarters of your pension this way.

It means we’re not ‘putting all your eggs in one basket’, giving your money the opportunity to grow through investment returns, and smoothing out some of the ups and downs that happen in the global economy from time to time. 

Pretty standard so far. This is what all pension providers do. 

But we see the future a little differently from most other pension providers. 

What's different?

In partnership with one of our global asset managers, we have chosen a selection of important criteria to identify a group of companies that we will invest in. 

The idea is to invest in companies that make a positive impact on the environment, people, and society - all without compromising potential investment returns for you. 

We apply our criteria to the whole range of investments out there, and then include or exclude companies based on how they measure up.

We’ve summarised this approach below. It includes the criteria we apply and some examples of how this affects where we invest your money:

Carbon emission reduction of 60%

How is it measured and applied?

• We use a range of data sources to collate emission data, and to benchmark changes over time.

  • Example: A portion of high emitting companies are excluded from the portfolio, for example global oil and gas giant, Glencore.

Green revenue increase of 100%

How is it measured and applied?

• Green revenue refers to company revenue that comes from the sale of products or services that help build a more sustainable future.

  • Example: A company such as Vestas Wind Systems, which generates revenue from the sale and service of wind power plants and onshore and offshore wind turbines.

Alignment to the United Nation’s Sustainable Development goals

How is it measured and applied?

• The Sustainable Development Goals are a collection of 17 global goals adopted by all United Nations Member States. They are designed to be a "blueprint to achieve a better and more sustainable future for all" and provide a framework we can use to analyse how well companies are doing to adopt these sustainability goals.

  • Example: Any company below a certain score is excluded on the basis that they aren’t considering sustainability in their business operations.

Immediate exclusions

How is it measured and applied?

Companies are  immediately excluded from investment if they:

• Have ongoing involvement in the area of controversial weapons

• Continually fail to respect established international norms such as the United Nations Principles for Business and Human Rights

  • Example: A company with any involvement in the manufacture of nuclear weapons would be excluded under this criteria, for example.

Why is money being invested this way?

Our job is to make sure your money has the opportunity to grow for you to use in later life. This means we think carefully about which investments are fit for the future. 

We see industries that are stuck in the past, in the way they treat the environment, people and society, as being riskier. 

These risks may mean those investments are less likely to grow, and some may even lose value.

At the same time, investments that reduce and absorb carbon emissions, and create climate-friendly assets for the future, provide opportunities for the long term. 

Our approach seeks to make the most of the opportunities while reducing the risks, so you can have a future that’s worth retiring into.

Article by

NatWest Cushon