ADVERTISEMENT

Scottish Widows to Pull $578 Million From Firms Ignoring ESG

Scottish Widows to Pull $578 Million From Firms Failing ESG Test

Insurer and pension manager Scottish Widows plans to pull at least 440 million pounds ($578 million) of investments from companies that fail to meet its green and ethical investing standards.

The firm, which is owned by Lloyds Banking Group Plc, will no longer invest in companies that derive more than 10% of their revenue from thermal coal and tar sands, producers of controversial weapons or violators of the United Nations Global Compact on human rights, labor, environment and corruption, it said in a statement on Monday. It didn’t name any companies that would be excluded.

“Our exclusions focus on companies we believe pose the most severe investment risk due to the nature of their businesses, which can’t be addressed through engagement,” Maria Nazarova-Doyle, head of pension investments at Scottish Widows, said in the statement.

The investments represent about 0.3% of Scottish Widows’ assets under management, which a spokesperson said totaled around 146 billion pounds at mid-2020.

With racial and economic injustice, as well as climate change, becoming key societal issues in recent years, asset managers globally are under increasing pressure from investors and regulators to bring their holdings into line with environmental, social and governance standards. In the U.K., which has pledged to bring all greenhouse gas emissions to net zero by 2050, the government has proposed to make the largest pension plans publish climate disclosures by the end of 2022.

Scottish Widows, which has about 6 million customers, said the exclusions will apply across its range of investment, life and pension funds. The divestment figure could grow if companies don’t take action to boost the sustainability of their businesses.

The move on exclusions follows Scottish Widows’ collaboration with BlackRock Inc. to design a fund integrating ESG criteria into its pension funds, according to the statement.

As much as 57% of mutual fund assets in Europe will be held in funds that consider ESG factors by 2025, according to a report last month from PwC. In addition, 77% of institutional investors surveyed by PwC said they plan to stop buying non-ESG products within the next two years.

The Financial Times reported the statement earlier.

©2020 Bloomberg L.P.