Scottish Widows has pledged to achieve net zero across its investments by 2050 | Credit: Scottish Widows
Pensions provider argues investments in carbon intensive companies are increasingly risky as it unveils plans to ramp up investment in climate solutions
Scottish Widows has announced plans to invest up to £25bn over the next four years in companies that are pro-actively tackling climate change.
The pension provider said the total would include a package of at least £1bn for firms developing climate solutions, such as alternative green energy, sustainable agriculture, and pollution prevention.
Head of pension investments and responsible investments Maria Nazarova-Doyle touted the move was a "major milestone" in the pension provier's journey to net zero. "This huge new investment starts today and will accelerate and grow rapidly over the next four years," she said.
Scottish Widows is already aiming to halve the carbon footprint of its investment portfolios by 2030 and reach net zero across the entirety its investments by 2050.
Scottish Widows said it had partnered with Blackrock and Schroders to develop and refine a range of funds which favour companies that are either developing climate solutions or pro-actively adapting their businesses to be less carbon-intensive.
To define 'climate solution' investments, Scottish Widows said it planned to assess what proportion of company revenue was associated with a range of activities, including alternative energy, energy efficiency, green buildings, sustainable agriculture, sustainable water and pollution prevention.
It said it would rely on MSCI Environmental Impact Revenue data to help with this classification.
Nazarova-Doyle said by committing to gradually reduce the overall emissions contained in Scottish Widows' investment portfolios to net zero, the firm would help support the companies it invests in to decarbonise in line with the 1.5C temperature goal set out in the Paris Agreement. But she noted the move would also generate financial returns.
"This isn't just about doing the right thing for the planet," she said. "Growing our customers' savings is always our number one priority - and that means reducing the financial risk which carbon intensive companies increasingly represent, along with seizing the huge growth opportunities the green economy offers."
Government climate advisors the Climate Change Committee estimatee £1.4tr will need to be invested between 2020 and 2050, to meet the net zero by 2050.
Scottish Widows said the huge scale and speed of this investment represented a "golden opportunity" for UK businesses which can successfully adapt, innovate and address climate change.
A version on this story first appeared on BusinessGreen's sister title Professional Pensions.
