Aegon has now shifted over £5bn of its workplace default funds into ESG strategies, with plans to transition a further £3.5bn into these strategies by the end of June.
This move follows Aegon’s announcement last July that it make it workplace default funds net carbon zero by 2050, and halve carbon emissions by 2030.
As a result more than two thirds (68 per cent) of Aegon’s TargetPlan LifePath default funds for growth-stage savers are now in ESG screened and optimised index funds from BlackRock. These seek to maximise exposure to positive ESG factors, including reducing carbon emissions and carbon reserves intensity, while exhibiting risk and return characteristics similar to those of the equivalent non-ESG index.
Key Workplace ARC default funds, including the in-house Aegon Workplace Default fund, now have around a 30 per cent allocation for growth stage investors in the HSBC Developed World Sustainable Equity Index fund, which seeks to target a 20 per cent increase in ESG ratings, a 50 per cent reduction in carbon emissions intensity, and 50 per cent reduction in fossil fuels reserves intensity.
Aegon is also now announcing the next stage in its transition programme, which will see around a quarter of Aegon’s Universal Balanced Collection, move to ESG strategies for growth stage investors. This is Aegon’s largest default fund, and adds this additional £3.5 billion to the £5 billion already moved.
There is an increasing expectation among customers that their savings be invested in a sustainable way and in a recent survey 77 per cent agreed that climate change is an important risk to consider when investing for the future. Nearly half (45 per cent) felt more strongly and wanted to see investing for a net-zero carbon future made mandatory.
Tim Orton, managing director for investment solutions at Aegon says: “Action is needed now to make a difference to the future world we will live in. £14bn was paid into defined contribution pension schemes in 2019 making them a major source of investment. The scale of the assets involved means pension providers have a real opportunity to make a difference and to invest in a way that will help create a lower carbon future. We want to continue to lead the way on this. I’m delighted we’ve hit our first milestone and reached £5bn of our pension scheme assets transitioned to lower carbon ESG strategies.”
