Nest's areas of focus

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 and joining investor organisations looking to tackle climate change.

Nest uses CDP data to evaluate climate risks as well as the opportunities. These could impact companies’ operations and financial performances and therefore our members’ returns. CDP’s data can help us to identify the largest carbon risks in our portfolio across various sectors.

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 workforce and human capital

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’re taking action to better our understanding of companies by:

• Working with employers to make more informed decisions when we vote and engage
• Actively researching ways to contribute to an improvement in workforce and human capital reporting for the benefit of savers, workers, companies, and the national economy. The findings from our latest research can be found here.

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.