Long-term savings and retirement business Phoenix Group announced today the launch of the new new Standard Life Sustainable Multi Asset ESG Default for pension fund clients of its Standard Life Assurance business, and their scheme members. According to Phoenix, the new passive offering will be a multi-asset, diversified solution with ESG fund components for key asset classes.

Phoenix stated that the new solution will aim to achieve good member outcomes in retirement, while integrating three responsible investment approaches, namely Screening, Tilting and Stewardship. It will focus on ESG factors that mitigate financially material risks, while seeking to improve sustainability outcomes at a portfolio level.

Earlier this year, Phoenix expanded its range of self-select responsible investment funds available to workplace scheme members, now totaling 12 funds, with plans in place to increase it further.

According to the company, the new solution provides exposure to equities and bonds from around the world, as well as property via a global Real Estate Investment Trust. It will set clearly defined sustainable outcomes, screening out companies with significant sustainability risks, while tilting investments to improve ESG scores relative to the parent index in areas such as reducing carbon intensity and enhancing green revenues. At launch in December 2020, ESG-componentry will make up 64% of the asset allocation, increasing to over 90% when further ESG componentry is launched during the second quarter of 2021.

Gareth Trainor, Head of Investment Solutions, said:

“Responsible investment is a central consideration in all the workplace pension solutions we offer. But we’re delighted we will be launching our new more focused ESG default for DC pension clients and their members before the end of the year. The demands placed on scheme default solutions continue to evolve. While delivering good member outcomes, value and rigorous governance is vital, responsible investment considerations have also become important to scheme members, policymakers and regulators alike. Our new ESG Default solution meets this demand. It’s a flexible solution, ultimately designed to provide good member outcomes by thinking more holistically about risks and opportunities.

“We’ve listened to feedback from stakeholders across the industry and sought input from our ESG experts to develop this solution. Placing ESG factors in the context of being ‘a financially material consideration’ helps identify areas that could have a positive or negative impact on the business model of a company that you are investing in. In particular, ensuring that these ESG factors have a financial benefit will align with trustees’ fiduciary duty to act in the best interest of members. Straying beyond these factors could be considered to be moral or ethical decision-making on behalf of members, something that the trustees or employer would need to canvas member opinion on.”