Scottish Widows’ £ 440m ethics move
Financial services giant Scottish Widows is to sell £ 440 million worth of shares in companies with questionable policies over issues such as climate change and weapons manufacturing.
The Edinburgh- based pensions and investment group also warned that the disposal could rise "much further" unless companies improve their practices and live up to its environment, social and governance standards.
I nve s t ment s b e i n g s o l d include stakes in companies that get more than ten per cent of their revenue from thermal coal and tar sands, a damaging way of extracting oil. The firm will also divest from manufacturers of "controversial" weapons and those that violate the UN Global Compact on human rights, labour environment and corruption.
Maria Nazarova- Doyle, Scottish Widows' head of pension investments, said: "As a large institutional investor, we have a vital role in shielding our customers from [ environmental, social and governance] investment risks, as well as influencing positive change through the investments we hold.
"Our exclusions f ocus on companies we believe pose the most severe investment risk due to the nature of their businesses, which can't be addressed through engagement."
Scottish Widows handles the pensions of nearly six million people.
C o m p a n i e s h a v e b e e n responding to investor pressure in recent years, taking into account more of the biggest pension savers' concerns.
After pressure from shareholders, both Shell and BP have said they hope to reach net zero emissions by 2050.
Nazarova- Doyle said: "The growth of these ' at risk' companies is likely to be severely limited by future regulations
and the changing views of customers and investors, leading to significant falls in their share prices."
Scottish Widows recently announced it was allocating £ 2 billion of its pension portfolios into a new fund developed by US group Blackrock to invest in the transition to a low- carbon economy.
T h e C l i mat e Tr a n s i t i o n f und, which S cottish Widows helped design, aims to increase investment in companies that are considered well
prepared for a transition and reduce exposure to those less equipped.
In July, Standard Life Aberdeen ( SLA) sold almost all of its investment in fast fashi on group Boohoo over i t s response to allegations over working conditions at supp l i e r f a c t o r i e s . S L A s a i d t he company's reaction t o the issue was “inadequate”. S L A h a d b e e n B o o h o o’s t hird- l argest i ndependent shareholder
I t has since
i ntroduced a
more rigorous approach to engaging with companies on issues including corporate governance.
A r ecent s ur vey of more than 500 people with investments by Aviva found that 55 per cent said the pandemic had had an impact on their likelihood to take environment, social and governance f actors i nto consideration when deciding where to invest their money.