Pensions » NEST: An innovative approach to ESG investing

An innovative approach is at the heart of the Environmental, Social and Governance (ESG) strategy that has been developed by National Employment Savings Trust (NEST), an initiative for ensuring retirement provision for those that may otherwise not have been covered.

ESG criteria is a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria look at how a company performs as a steward of the natural environment.

Social criteria examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

In this video Diandra Soobiah, Head of Responsible Investment at NEST, says that an innovative approach by the pension scheme has been developed in response to a growing appetite for funds to be invested in a way that is less likely to deliver negative impacts.

By investing in companies that are well run in these areas and are more likely to deliver long term, sustainable returns, they should have a better chance of seeing having good retirement provision on retirement.

Soobiah says a key aspect of NEST’s approach to ESG is a willingness to take an open approach to the investment strategy, citing the example of the launch of the pension scheme’s climate aware fund.

She says the investment strategy tilts away from companies that are most at risk from climate change and invests more in those companies that are transitioning to a low carbon economy.

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