The UK’s new default retirement system, NEST, may not have invested a single penny in contributions but when it does, is determined to be a good Steward on behalf of the nation’s investors.
At a presentation to launch NEST’s Statement of Investment Principles last week, chairman Lawrence Churchill confirmed that, in addition to offering Ethical and Sharia compliant fund options for savers, NEST will become a signatory of both the UK Stewardship Code and the UN’s Principles for Responsible Investment.
The SIP itself is underpinned by a more detailed explanation of the scheme’s seven core investment beliefs where the commitment to Stewardship ranks second it its primary focus of understanding the needs of its future members.
We believe it is important for NEST to act as a responsible and vigilant asset owner and market participant across our range of retirement funds.
It is our view that responsible investing will help deliver long-term value to our members. We will however take a proportionate approach to our activities when assets under management are modest.
Initially, we will implement our responsible ownership approach through:
- considered voting of all the shares we own where practical
- engagement with companies
- collaboration with other institutional asset owners
- engagement and dialogue with regulators and industry bodies around the globe
- becoming a signatory to the Financial Reporting Council’s Stewardship Code and the UN Principles of Responsible Investment (UN PRI) and using their best practice principles to benchmark the NEST approach to responsible investing.
Our approach to responsible ownership is one element of our overall approach to managing environmental, social and governance risks. Integrating ESG factors into our investment process is an important element of our approach to managing investment risks.
Although NEST will make use of an overlay partner in the early stage of the Scheme, it was made clear that the Trustees expected all its managers to integrate ESG factors into its investment process and that there would be in-house capacity building. Mark Fawcett, Chief Investment Officer noted that UBS – one of three managers selected (global passive equities) was chosen partly because its views on responsible ownership were in line with NEST’s.
Last Updated: 28 March 2011