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Nest Ethical Fund

Ethical pension funds aim to add value to members’ pension pots throughout their lifetime, while considering their values too.

What’s an ethical pension fund?

Newspapers and industry bodies have been quick to report on the rise of eco-friendly pensions over the last few years. But ethical investing means different things to different people. And if there’s not one clear-cut definition, how can savers be sure where their money is going?

All our members’ money is invested responsibly, regardless of which fund it’s held in. That means we carefully consider environmental, social and governance (ESG) issues across all markets we invest in because it helps us grow members’ pots over the long term. Ethical investment means we also apply decisions based on moral values. 

Who’s this fund for?

This fund is designed for members who are concerned about the impact their money could have on the environment or society, in areas such as:

  • Fossil fuels
  • Human rights
  • Arms and weapons

What does this fund invest in?

We wanted to understand what people expected from an ethical fund before creating ours. We talked to our members, investigated global norms about what ‘ethical’ means and reviewed other fund providers. This helped us design a fund that’s based around what’s important to people.

Ethical issues

We avoid investing in companies that:

  • don’t follow human rights conventions or UK and international labour standards.

We want to invest in companies that:

  • keep good control of their supply chain. For example, they don’t buy goods from a third party that uses child labour.

We avoid investing in companies that:

  • own geological reserves of oil, gas or coal
  • use or trade threatened species
  • don’t actively try to minimise pollution
  • engage in controversial mining and quarrying practices such as fracking

We want to invest in companies that:

  • take steps to reduce their carbon-intensive footprint
  • are developing solutions such as renewable energy infrastructure and low-carbon technologies
  • have strong environmental policies, reporting and management
  • look after biodiversity and the environment
  • take good care of the world’s water supply

We avoid investing in companies that:

  • don’t follow a clear code of ethics
  • are involved in bribery or corruption

We want to invest in companies that:

  • have a clear code of ethics
  • follow principles laid down by the UN Global Compact
  • have a diverse board with separation between the roles of chief executive and chairperson

We avoid investing in companies that:

  • sell or make weapons systems or components as their main line of business
  • are directly involved in the production or sale of:
  • cluster munitions
  • landmines

We avoid investing in companies that:

  • test cosmetics on animals 
  • are in the tobacco or gambling industries

We want to invest in companies that:

  • meet animal welfare codes of practice relevant to their industry
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Nest Ethical Fund brochure

In depth information about each of these issues, including how we decide which companies are excluded from the fund.

Download Nest Ethical Fund brochure (PDF)

How does the fund try to grow members’ money?

Our members’ eggs aren’t in one basket

Most ethical funds only invest their members’ money in one particular market, such as shares or bonds. Our fund is one of the only UK ethical options that invests in lots of different markets. By spreading investment risk this way, we make sure members’ eggs aren’t in one basket which can help to protect and grow their savings. 

You can find more information about different types of investment in our factsheet.  

Moving members’ money at the right time

Our fund is also one of the only ethical options that invests in different markets at different stages of a members’ life. Just like our Nest Retirement Date Funds, we automatically move members’ money into appropriate investments when they reach certain anniversaries and get closer to retirement. We aim to take the right amount of risk at the right time to help grow our members’ pension pots and protect against losses as retirement gets nearer. 

The Nest Ethical Fund has three phases that take different levels of risk – foundation, growth and consolidation. 

Illustration showing level of risk until the end of retirement for the Nest Ethical Fund

Members can find out more about how we try to grow and protect their savings during each phase in the Nest Ethical Fund brochure.

How does the fund compare?

This fund offers members many of the same benefits as our Nest Retirement Date Funds, like:

  • the simple, low-cost charging structure that applies to all our funds
  • an award-winning investment approach delivered by our in-house team
  • three investment phases tailored to a member’s lifetime 
  • comparable investment returns that aim to beat inflation 
  • the same careful risk management approach

As this fund excludes certain companies and markets on ethical grounds, our members’ money is placed into a more focused range of investments. This makes the fund higher risk when compared to Nest Retirement Date Funds, so while members could experience sharper falls, they might benefit from bigger gains too.  

It’s free of charge for members to change funds and there are no extra costs involved when choosing the Ethical Fund.

How good is the Nest Ethical Fund?

The consumer website Good With Money ranked our fund among the best ethical pension funds on the market. We’ve also been recommended by Ethical Consumer as one of their Best Buys when it comes to ethical workplace pensions. On top of that, we’ve won multiple awards for trying to grow all our members’ savings responsibly and sustainably through world-class investments.