NEST today announced it has become a signatory to the UN-backed Principles for Responsible Investment (PRI), a framework for responsible investment. There are currently 120 UK-based signatories to the PRI, including 26 asset owners. Globally, there are 930 signatories.
NEST believes that factoring in environmental, social and governance (ESG) issues across all asset classes and markets where possible is in the interests of our members.
Mark Fawcett, NEST CIO, said:
‘Signing the Principles for Responsible Investment delivers on a commitment we made earlier this year when we announced our approach to investing members' money. NEST believes that to protect and enhance the value of investments over the long term, it must act as a responsible asset owner and market participant. We also believe that investing responsibly enhances long-term value and reduces risk, and we have therefore embodied this view within our investment beliefs.'
Sharon Darcy, Trustee Member and member of NEST's Investment Committee said:
‘NEST's Trustee Members are committed to best practice on governance including responsible investment. Signing the Principles for Responsible Investment demonstrates NEST's intention to contribute to a more long-term oriented, transparent, sustainable and well-governed investment market.'
Wolfgang Engshuber, PRI Chair said:
‘In coming years, NEST will become one of the most important asset owners in the UK pension fund industry, and we are delighted NEST has decided to become a signatory to Principles for Responsible Investment. I believe NEST is leading by example in their commitment to implement the six PRI principles and look forward to NEST participating as an active member of this global UN-backed initiative.'
As part of NEST's commitment to responsible investment, at this stage the scheme will exercise its voting rights via its fund managers and actively engage with its investee companies in order to meet standards of good practice as set out within the Principles for Responsible Investment.
How is NEST currently working in line with the PRI?
In designing and building NEST's responsible investment approach, we have already started implementing policies and processes in with the PRI:
formally assessing the capabilities of external investment managers to incorporate environmental, social and governance (ESG) issues
procuring a responsible ownership overlay specialist provider to address ESG issues through an engagement programme with investee companies
procuring a specialist provider of ESG data to help construct our internal ESG risk model and identify ESG risks in our investee companies and sectors, prioritise our engagement efforts and challenge fund managers (and our RO overlay provider) on if and how they are addressing these risks and issues.
These procurement announcements will be made later this year.
NEST is also committed to becoming a signatory of the Financial Reporting Council's Stewardship Code.
What are the Principles for Responsible Investment?
1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.
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