NEST as a responsible investor
Our members save with NEST over many years. This means we need to think carefully about all the investment factors that could impact their pot over the long term.
This includes considering how companies and markets operate and how they treat people and the environment when we make decisions on investing members’ money. These issues are likely to affect the performance of the companies and other assets we invest in to grow our members’ money over many years.
NEST believes organisations that are well-run with sound environmental and social practices have a better chance of sustaining long-term success and profitability. By focusing on sustainable practices, we’re looking to boost and protect our members’ pots.
That’s why NEST has worked with UBS to develop their Life Climate Aware World Equity fund. We need to prepare our members’ portfolios for the transition to a low carbon global economy. As one of our ‘building blocks’, this fund now forms a key part of our investment strategy.
We also want to benefit society and the environment our members live and retire in.
NEST applies this approach to all our Retirement Date Funds and fund choices.
Why NEST invests responsibly
NEST has a set of investment beliefs that helps the organisation make better decisions about how we invest members’ money. One of NEST’s beliefs is that ‘As long-term investors, incorporating environmental, social and governance (ESG) factors is integral to the investment management process.’
Following on from this we have four main objectives that help guide and prioritise our activities:
Better risk adjusted returns - we want to target an improvement in ESG performance where there is evidence doing so can lower the amount of risk we need to take in order to achieve a return.
Better functioning markets - we want to improve how markets operate and are regulated in jurisdictions where we invest.
Support long-term wealth creation - we want to encourage companies we invest in to deliver sustainable and stable performance to support good returns for our members over many years.
Manage reputational risks - we want to protect NEST’s reputation and grow trust with our members by encouraging companies to act in ways our members can feel confident about. Companies that aren’t properly run, or don’t consider the environment or people in a way our members would expect, damage how they are seen and how members feel about investing.
Find out more by reading our Responsible investment objectives document (PDF).
More about NEST’s investment governance:
How NEST invests responsibly
How we choose fund managers, being an active owner by engaging and voting, and monitoring ESG risks and opportunities are the main ways we act as a responsible investor.
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