Responsible Investment · By Claire Donnelly, Head of Responsible Investment · Published 30 June 2026
βClimate-awareβ is one of those phrases that can mean everything or nothing. Used loosely it sounds like a marketing badge. Used properly it describes something quite specific and quite unromantic: the recognition that climate change is a financial risk to the money in your pension, and that a fund manager who ignores it is not being neutral, they are simply taking the risk without measuring it.
Start with the time horizon
A pension is one of the very few financial products with a forty-year outlook. Someone auto-enrolled at 22 will still be invested in the 2060s. Over that period, the physical effects of a changing climate and the policy response to it will reshape which industries thrive, which are taxed, which face stranded assets and which quietly disappear. Whether or not you have a view on climate as an ethical question, it is unavoidable as an investment question.
What we actually do
Most members never change their investment choice, which means the default fund carries the responsibility. That is where the work goes. In practice, climate-aware management of a default fund involves a handful of concrete activities:
- Measuring exposure. Understanding the carbon intensity of what we hold, and how it is changing, rather than asserting a position.
- Tilting the portfolio. Systematically holding more of the companies managing the transition well and less of those managing it badly, without abandoning diversification.
- Setting and reporting targets. Publishing where we are and where we intend to be, so we can be held to it.
- Stewardship and voting. Using the voting rights attached to our shares to press company boards on transition plans, disclosure and executive accountability.
- Engagement before exclusion. Selling a holding removes it from our report but changes nothing in the real economy. Owning it and voting can.
The divestment question, honestly answered
People reasonably ask why we do not simply sell everything carbon-intensive. Sometimes exclusion is right, particularly where a business model is fundamentally incompatible with any credible transition. But blanket divestment has a catch: the shares are bought by someone else, usually an owner with no interest in pressing for change, and our influence goes with them. Holding a stake in a heavy emitter that is genuinely transitioning, and voting on it every year, often does more good than a cleaner-looking spreadsheet.
Does it cost members money?
This is the fair question and it deserves a straight answer. Our duty is to members' financial interests first; climate-aware investing is pursued because we believe it protects and improves long-term returns, not in spite of returns. Managing a foreseeable, systemic risk is ordinary prudent investment. We publish our reporting so members can judge for themselves rather than take our word for it.
Who is watching
None of this is decided by a marketing department. Our investment approach is overseen by an independent Trustee Board whose legal duty is to members, not to the organisation. Because we have no shareholders, there is no competing interest pulling in the other direction — no pressure to prioritise a quarterly result over a forty-year one.
What this means for you
- You do not need to do anything. The default fund is managed this way as standard.
- You can look up how your money is invested and what we vote on through your online account.
- You can switch funds if you want a different approach, though most members are well served by the default.
Climate-aware investing is not a statement about values. It is what taking a forty-year risk seriously looks like.