Investment, pension and insurance firm Scottish Widows announced a series of climate targets for its £170 billion investment portfolio, including goals to halve the funds’ carbon footprint by 2030 and to reach net zero by 2050. In addition, the company committed to invest billions of pounds in climate solutions, including renewable energy, low carbon buildings, and energy efficient technologies, by 2025.

According to the pension firm, the new commitments are aimed at safeguarding customers’ investments in the long‐term from the risks associated with climate change while taking advantage of related investment opportunities. The company has become increasingly active on managing sustainability risks, with today’s move following a recent announcement by the firm that it will divest at least £440 million from companies that have failed to meet its ESG standards.

Maria Nazarova‐Doyle, Head of Pension Investments at Scottish Widows, said: 

“Our first responsibility is always to our customers and ensuring we are looking after their investments for the long‐term. Moving to net zero will protect savings against climate‐related risks and uncertainty and offer longer‐term sustainable growth by accessing low carbon transition opportunities.

“To get there we must set shorter‐term targets. Carbon emissions need to halve between now and 2030 or we won’t stand a chance of meeting the longer‐term net zero goal.”

Scottish Widows also issued a call on the UK pension industry to set net zero targets for their own investment funds ahead of the United Nations Climate Change Conference COP26 in November 2021, noting that 85% of pension savings, or more than £2 trillion, are not held in funds committed to net zero.

Nazarova‐Doyle said:

“The pensions industry holds trillions of pounds worth of investments and can play a game changing role in supporting the global economy’s transition to a low carbon future, while earning sustainable returns for pension savers.

“We are making steady progress as an industry, but it’s not fast enough. The reality is we still have a very long way to go to close the green gap to net zero. To help prompt the shift to a low carbon economy, others within our sector must also make meaningful, large‐scale net zero commitments that include a dramatic reduction in emissions, if we were to have a chance to get to Net Zero by 2050.”

Commenting on Scottish Widow’s new commitments, Stephanie Pfeifer, CEO, Institutional Investors Group on Climate Change, said: 

“This is a very welcome commitment from Scottish Widows. Through setting a net zero target with a strong short‐term target and identifying and implementing a practical approach to realising these goals, investors play a key role in securing a sustainable and resilient future.

“We need to see investors across the entire sector align their portfolios with a net zero future. Scottish Widows has played an important role in IIGCC’s work, developing a Net Zero Investment Framework to make net zero alignment possible, together with over 70 of our members.”