Investment, pension and insurance firm Scottish Widows announced today that it will divest at least £440 million from companies that have failed to meet its ESG standards. While the move is believed to be the most far‐reaching exclusions policy by a major pensions provider, according to the company, the firm stated that ESG-based divestments could grow much further if companies do not take action to improve the sustainability of their business practices.
According to Scottish Widows, the new policy is part of the firm’s Responsible Investment and Stewardship Framework. Divestment targets under the policy include companies which derive more than 10% of sales from thermal coal and tar sands, manufacturers of controversial weapons and violators of the UN Global Compact (UNGC) on human rights, labour, environment and corruption, with exceptions made if the firm believes that it can influence positive change.
These exclusions will be applied broadly across the Scottish Widows’ life, pension and OEIC funds, and will include index trackers as well as its own active funds.
Maria Nazarova‐Doyle, Head of Pension Investments at Scottish Widows, said:
“As a large institutional investor, we have a vital role to play in shielding our customers from ESG investment risks, as well as influencing positive change through the investments we hold. 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.
“The growth of these ‘at risk’ companies is likely to be severely limited by future regulations and the changing views of customers and investors, leading to significant falls in their share prices.
“We’ve worked hard to implement our exclusions across our fund range without limiting this initiative to our actively managed funds. We’re excluding investments from the index trackers which underpin our flagship multi‐asset funds too.
“We recognise there’s more we can do as a company and that this is just one step in the journey. However, this underlines our commitment of becoming a market leader in responsible investment and to make a real difference.”