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Responsible investment

Our members save with NEST over many years. This means we need to think carefully about all the investment factors that could affect their pots over the long term.

We consider how companies and markets work 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.

We believe well-run organisations with sound environmental and social practices have a better chance of long-term success and profitability. By focusing on sustainable practices, we’re looking to boost and protect our members’ pots.

We also want to improve 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 help us make better decisions about how we invest members’ money. One of our 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 work 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’re seen and how members feel about investing.

Find out more in our Responsible investment objectives document (PDF).

How NEST invests responsibly

Click on each tab to find out more

Case studies

Find out how we have been working for change in four key areas.

Climate change

NEST is helping to address climate change by:

  • investing in a climate aware fund that manages the long-term risks and opportunities of climate change
  • encouraging the energy companies we invest in to move towards a low carbon economy
  • monitoring a variety of risk factors and opportunities at different levels of the investment process
  • taking collective action, including signing the Paris Pledge (opens in a new window)  and joining investor organisations looking to tackle climate change

Banking conduct and culture

NEST invests in all of the large global banks. It’s clearly in our members’ interests to encourage all banks to work together to share good practice and help them improve their cultures and conduct.

We’ve been working to:

  • understand what excellent and poor practice looks like
  • understand whether the indicators banks are using to measure change in conduct and culture are moving, and in which direction
  • keep the pressure on banks to make lasting, positive changes to conduct and culture

We want to support banks by researching and sharing practices more likely to build trust and support sustainable returns. In 2017, our research was published in the Journal of Banking Regulation.

Understanding fair pay

We want to know the companies we invest in are treating their people decently. This includes having insight into things such as pay and staff development. By understanding companies’ approaches to their people, we can be more confident that those we invest in are building long-term sustainable and successful businesses.

We’re working with employers to understand why:

  • they may use employment practices such as zero hours contracts
  • they have different viewpoints on training and benefits

We want to work with employers to make more informed decisions when we vote and engage.

Audit best practice

Investors rely on financial statements and reporting to tell them how companies are doing, which are completed by independent auditors. Having an independent and unbiased audit helps us trust what we’re told by the company. If we can’t trust what a company is saying about how it’s being run, then we can’t be confident about investing in it.

NEST is working with audit committees in different companies to understand and share best practice. We want to support high-quality audits in the interests of investors, including our members.

As at December 2015

BMO All Votes Report December 2015 (PDF)
BMO Votes Against Management Report December 2015 (PDF)
HSBC Amanah Voting Report December 2015 (PDF)
HSBC GIF Global Emerging Markets EIS Voting Report December 2015 (PDF)
LGIM Global Real Estate Equity Index Fund Voting Report December 2015 (PDF)
Northern Trust Proxy Voting Report December 2015 (PDF)
UBS Proxy Voting Report December 2015 (PDF)
UBS Responsible Investment Report December 2015 (PDF)

As at September 2015

BMO All Votes Report September 2015 (PDF)
BMO Votes Against Management Report September 2015 (PDF)
HSBC Amanah Voting Report September 2015 (PDF)
HSBC GIF Global Emerging Markets EIS Voting Report September 2015 (PDF)
LGIM Global Real Estate Equity Index Fund Voting Report September 2015 (PDF)
Northern Trust Proxy Voting Report September 2015 (PDF)
UBS Proxy Voting Report September 2015 (PDF)
UBS Responsible Investment Report September 2015 (PDF)

As at June 2015

BMO All Votes Report June 2015 (PDF)
BMO Votes Against Management Report June 2015 (PDF)
HSBC Amanah Voting Report June 2015 (PDF)
HSBC GIF Global Emerging Markets EIS Voting Report June 2015 (PDF)
LGIM Global Real Estate Equity Index Fund Voting Report June 2015 (PDF)
Northern Trust Proxy Voting Report June 2015 (PDF)
UBS Proxy Voting Report June 2015 (PDF)
UBS Responsible Investment Report June 2015 (PDF)

As at March 2015

F&C Investments All Votes Report March 2015 (PDF)
F&C Investments Votes Against Management Report March 2015 (PDF)
HSBC Amanah Voting Report March 2015 (PDF)
LGIM Global Real Estate Equity Index Fund Voting Report March 2015 (PDF)
Northern Trust Proxy Voting Report March 2015 (PDF)
UBS Proxy Voting Report March 2015 (PDF)
UBS Responsible Investment Report March 2015 (PDF)

Responsible investment reports

Read more about our approach and the progress we’re making in our annual responsible investment reports.

Read our 2017 report here
Read our 2016 report here

Working for change together

Read about how we work with partners, initiatives and codes to achieve our responsible investment objectives.                                                     

Read more here

Statement of investment principles

Find out more about the investment governance around NEST as a responsible investor by reading our Statement of Investment Principles.

Read more here