ESG Roundup: Scottish Pension Fund Backs Sustainability Strategy

The £711m (€831.4m) Scottish Borders Council Pension Fund has allocated an undisclosed amount to a sustainability strategy run by Morgan Stanley Investment Management (MSIM).

The strategy, launched last year, excludes tobacco, alcohol, and fossil fuel stocks and is “carbon light”, MSIM said.

William Lock, head of the asset manager’s international equity team, indicated that the Global Sustain fund would also take into account the need for “active long-term engagement with companies”.

Although MSIM declined to disclose the size of the mandate, it already ran an £86m global equities allocation for the Scottish Borders scheme at the end of March 2018, according to the pension scheme’s latest annual report.

Councillor David Parker, chair of the pension fund committee for for the scheme, said: “The Scottish Borders Council Pension Fund believes that a positive approach to ESG issues can positively affect the financial performance of investments, whereas a failure to address these considerations can have a detrimental effect.”

Auto-enrolment provider shifts to ESG default fund

Legal & General’s (L&G) UK defined contribution (DC) master trust is to shift to a multi-asset fund focused on ESG themes as the default option for its 800,000 members.

The DC master trust claimed it was the first auto-enrolment provider to have an ESG-themed default option, in a press release published earlier this week.

The product – the L&G Future World Multi-Asset Fund – is run by Legal & General Investment Management (LGIM), the £1trn asset manager, and is made up of LGIM ESG-themed index funds.

It also incorporate LGIM’s “climate impact pledge”, part of the asset manager’s engagement programme with companies “critical to the shift to a low-carbon economy”.

The new default option is available to clients using the “sole select governance” option within the L&G Master Trust.

While L&G claimed a first for auto-enrolment default funds, it is not the first DC fund to switch to an ESG-themed default option: HSBC’s UK pension fund selected L&G’s Future World fund for its DC offering in 2016.

In addition, fellow master trust NEST has been incorporating climate-related risks into its “climate aware fund”, while auto-enrolment vehicles run by Willis Towers Watson and The People’s Pension have also allocated to ESG strategies in recent months.