NPT announces new sustainable default investment strategy

The National Pension Trust (NPT), part of XPS Pensions Group, has announced plans for a new environmental, social and governance (ESG) focused default investment strategy, impacting over 44,000 members and £978m in total assets.

The new ESG-orientated strategy will focus on climate change and the carbon transition whilst aligning with a two degree investment policy, and will also aim to invest members’ savings in a way that aligns with the UN’s sustainable goals.

As part of its commitment, NPT will also work in partnership with State Street Global Advisors, the Transition Pathway Initiative (TPI), and Legal and General Investment Management to align its portfolio with the Paris Agreement and inform investment research.

Commenting on the shift, NPT head, Paul Armitage, said: "Climate change poses a real risk to our future, which is why we want to make the way we invest assets more sustainable.

"That’s why we have selected the TPI – it achieves our initial goals for reduced carbon exposure today, reducing carbon related metrics by c. 50 per cent now - but also incentivises a transition to future lower carbon intensity for businesses around the world by allocating capital to those firms that do it best."

Adding to this, NPT chair of trustees, Ian Davies, highlighted the development of a new default fund as "an important step for the NPT".

"It is another example of how NPT is committed to providing market leading investment strategies that reflects the preferences of our members while helping employers meet their ESG responsibilities," he continued.

State Street Global Advisors head of UK institutional distribution, Alistair Byrne, added: “UK pension schemes are actively seeking to provide their members with exposure to the investment opportunities generated by the transition to a low-carbon economy.

"This strategy offers an efficient index-based solution, enabling them to improve their portfolio’s carbon profile and reduce climate risk, while maintaining target returns.”

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