Major workplace pensions provider NOW: Pensions is to commit to net zero carbon emissions by 2050 and an expanded sustainable investment strategy in a major shift towards ESG investments.

The pensions firm believes it can achieve higher growth at the same time as it increases its focus on green and sustainable investments.

Some 50% of the portfolio’s net assets will be in sustainable bonds and sustainable equities by the end of 2021.

The company is also increasing the ‘journey path’ to retirement for members from 10 to 15 years to protect savings and allow a longer, lower risk ‘glidepath’ to retirement.

NOW: Pensions, which has 1.8m pension savers, will commit to so-called ‘net zero’ carbon emissions by 2050 and also support a 50% reduction in emissions by 2030.

The firm, which currently manages £2.5bn of UK pension savings, says it will move money into sustainable bonds and sustainable equities which will form least 50% of the portfolio’s net asset value by the end of 2021. 

The revised approach will see members’ funds invested in an equity fund which invests in companies that have stronger sustainability characteristics and lower carbon footprints, the firm says.

The changes follow the trustee’s ‘root and branch’ review of the trust’s investment strategy. 

NOW has also increased its allocation to green and social bonds and has invested in a low carbon ESG equity portfolio. The firm continues to offer members one default fund. 

Joanne Segars, chair of the trustee at NOW, said: “The changes announced to our investment strategy demonstrate our commitment to sustainability and responsible investment which targets having over 50% of the net assets value of the portfolio aligned to the trustee’s ESG principles by the end of 2021.

"I am delighted, too, that the trust has committed to reach net zero by 2050, with an interim target of 2030. We believe the focus on ESG supports better long-term financial outcomes for our members in later life.”