Responsible investment

NEST and responsible investment

NEST will own equities, corporate bonds and other asset classes on behalf of NEST members. Investing in and owning stakes in companies and other investments brings rights, responsibilities and obligations.

We believe that in order to fulfil this commitment and to protect and enhance the value of the investments over the long term, we must act as a responsible asset owner and market participant.

As part of this duty we will integrate the consideration of environmental, social and governance (ESG) issues across all asset classes and markets. In particular NEST will exercise ownership rights, including voting and engagement rights, in order to protect members' interests.

In line with our commitment to transparency, NEST will report to members and stakeholders on its responsible investment activities.

You can read more about the research behind NEST’s approach to responsible investment in the Benchmarking Responsible Investment report conducted by AON Hewitt on behalf of NEST.

Codes and initiatives

NEST has signed the UK Stewardship Code.

The Code is a set of good practice principles for investors. It aims to improve the way that companies and shareholders work together in the long-term interests of shareholders. It also encourages good engagement to improve the way that companies are run. The Financial Reporting Council (FRC) set up the code in July 2010. The FRC has listed NEST as a signatory on its website.

As part of our commitment to the code we've published our Statement of Compliance with the UK Stewardship Code. This explains the steps we'll take to meet the seven principles outlined in the code.

NEST is a signatory to the United Nations-backed Principles for Responsible Investment (UNPRI).

The PRI is another set of principles for investors, set up to encourage consistent standards for responsible investment around the world. It was developed in co-operation with a range of international bodies, backed by the United Nations.

NEST is an affiliate member of UK Sustainable Investment Finance (UKSIF).

The UKSIF offers affiliation to occupational pension funds that own shares in companies but don't sell products or services, or manage their own funds. This is intended for schemes that are interested in sustainable and responsible finance as owners of shares in companies. These affiliate schemes are not full members of UKSIF and do not play a formal role in governance.

Fund manager monitoring

As direct owners of shares, our fund managers can have a positive influence on the running of the companies they invest in on our members' behalf. We ask our fund managers to let us know how they are addressing their commitments to responsible investment. We also ask them to report on how they use the voting rights that come with fund ownership.

We've received reports on responsible investment and voting records from UBS and HSBC.

We expect to receive similar reports from our other fund managers before too long and will publish these when they become available.