UK Pension NEST Aims for Net-Zero Carbon by 2050

New climate change policy expected to halve portfolio’s carbon emissions within 10 years.


UK pension fund the National Employment Savings Trust (NEST), which says it is the largest pension in the country by membership, has unveiled a new climate change policy designed to halve the carbon emissions in its portfolio within 10 years and make it completely net-zero by 2050.

The company said the policy aims to align it with the Paris Agreement goals to keep global temperature rises within 1.5 Celsius above pre-industrial levels over the next 30 years.

“Climate change poses serious risks to both our savers and their investments,” NEST CIO Mark Fawcett said in a statement. “As the world’s economy slowly recovers from coronavirus, we want to ensure this recovery is a green one. We have a unique opportunity to support sustainable growth and transition towards a low-carbon economy.”

To help it reach its climate-related goals, NEST moved £5.5 billion ($7.2 billion) of equity shares into climate aware strategies, which represents 45% of its entire portfolio. The firm said the move is the equivalent of taking 200,000 cars off the road or heating nearly 50,000 households for a year via renewable energy sources. NEST will also begin divesting from companies involved in thermal coal, oil sands, and arctic drilling, and it is expected to be completely divested by 2025 at the latest.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

Additionally, NEST said it will invest a greater percentage of its funds directly in green infrastructure on top of the £100 million it has already invested in renewable projects across Europe.

NEST cited recent survey data from market research company YouGov that found that, among 2,010 UK adults, of which 1,183 are saving into at least one pension, 79% said they believe it’s important that the economic recovery from COVID-19 take climate change into account. The survey also found that 65% of pension savers believe their pension should be invested in a manner that reduces the impact of climate change, with just 4% strongly disagreeing with that sentiment.

“This suggests pension schemes have a responsibility to put tackling climate change at the heart of their default strategies,” NEST said in its announcement, “rather than expecting consumers to make ‘green’ fund choices.”

NEST said the £5.5 billion it is investing through its climate aware equities fund represents more than £1.2 billion removed from the biggest carbon emitters and invested in companies leading green solutions and implementing strong transition plans.

It also said it expects its fund managers to align the portfolio they manage for NEST with the 1.5C global warming limit, which will be a requirement for all new mandates. Incumbent managers will have three years to demonstrate meaningful progress against defined benchmarks. Additionally, Nest said it will make climate change a focus of its stewardship strategy.

“We believe that stewardship is one of the most powerful tools investors can use to influence companies to change to low-carbon approaches,” NEST said. “It also provides a means for protecting our members’ pension pots. Where engagement fails, we will divest.”

Related Stories:

Australian Pension Fund Commits to Becoming Net Zero by 2050

Harvard Adopts Goal for ‘Net-Zero’ Greenhouse Gas Emissions by 2050

Global Green Bond Market Set to Explode

Tags: , , , , , , ,

A Bad Sign? Lots of Corporate Insiders Are Selling Shares

This indicator has presaged two previous peaks, although its long-term record as a predicter is mixed.


Do they know something we don’t? Corporate insiders have done a lot of selling these days, unloading company shares as the market keeps on rising.

This could be a sign that the market could be nearing a top, by the reckoning of InsiderInsights, a widely respected newsletter that tracks buying and selling by company executives, board members, and other insiders. “They are finding more reasons to sell than to buy,” said Jonathan Moreland, its director of research.

The last time the service’s gauge reached this level of selling was right before the market’s February top. Collectively, the current reading shows a widespread trend to lighten insiders’ portfolios of company shares.

Lately, companies with insider selling outnumbered those buying by 186%. That is close to the 200% level that, over the past decade, normally marks short-term market tops, InsiderInsights reported.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

This indicator, by no means infallible, could signal insider apprehension about what lies ahead for the market. Or it might just be a prudent move to redeploy capital, after a four-month-plus rally, to ensure their portfolios are diversified. From the stock market’s March low, the S&P 500 has rebounded 46%, almost reaching its February high point.

As a portent of what’s to come, the trading of corporate insiders has a mixed track record. Largescale selling prior to the February market peak was prescient. So was the selling spree in January 2018, right before a market correction. But similar sales surges in 2017 and 2019 were greeted by continued market rises.

Two corporate honchos who sold stock recently were Morgan Stanley CEO James Gorman and UnitedHealth Group Chairman Stephen Hemsley. Both company’s shares took a pasting in February and March, and since have turned around, returning to where they started the year. From the market bottom March 23, when massive Washington stimulus was announced, the investment bank has climbed 75% and the health insurer 56%.

Other insiders selling, according to Bloomberg data, include Broadcom’s Charlie Kawwas, chief sales officer ($1.61 million); JB Hunt Transport Services Chairman James K. Thompson ($2.03 million); and Costco Wholesale’s James Murphy, executive vice president ($1.63 million).

Insider sales, said Moreland of InsiderInsights, “can identify trend change. The market can always humble you, though.”

To the American Association of Individual Investors, insider sales don’t usually show problems unless multiple insiders are divesting at a fast pace. “That can be a red flag,” the group’s policy statement said. “But insiders typically buy their shares on the open market for one reason—the stock’s cheap.”

That’s not the case nowadays.

Related Stories:

Stocks Now Are the Spittin’ Image of 2009, Morgan Stanley Strategist Says

How Little-Guy Investors Bested the Pros by Riding Popular Iffy Stocks

Stock Market’s Rise Doesn’t Jibe with Overvalued P/E, Stovall Warns

Tags: , , , , ,

«