Master trust the People’s Pension will move the bulk of its assets, £15bn of a total £25bn, into climate-aware investment strategies to protect member assets from climate change and reach net zero emissions by 2050.  

The shift to the MSCI Climate Change indices marks the “biggest single move of its kind by a UK master trust” and means 70% of the scheme’s main investment fund will be Paris-aligned, the defined contribution provider said. It reduces the carbon footprint of the investments for most of People’s 6.5m members by 30%. 

The new investment approach tracks regional indices which aim to go beyond the minimum standards of the EU’s Climate Transition Benchmark. This results in an initial emissions reduction of at least 30% and will further reduce by 7% each year, to reach net zero emissions by 2050. Within the assets covered by the new climate strategy, the fund will divest from thermal coal.  

With the change, the fund aims to manage the long-term risks posed to members’ investments by climate change and a green transition that are not currently being priced by the market, the fund said, while also giving members confidence that their investments are becoming Paris-aligned. It is due to publish its updated responsible investment policy soon.

Chief investment officer of the People’s Partnership, Dan Mikulskis, said the changes make the People’s Pension “one of the greenest master trusts in the UK”. 

“Key to our investment philosophy is conviction in what we do – if we really believe in something we want to make it core to our members’ retirement savings, rather than a tick to a box, and that’s what we’ve done here,” he said. 

Mark Condron, chair of trustees, added: “This is a hugely significant moment for the People’s Pension and its 6.5m members as it reinforces our commitment to tackling climate change through investing. Our members can be confident their savings are working towards achieving Net Zero targets and not against it. 

Several master trusts have for some time sought to protect assets from the impact of climate change, as well as to differentiate themselves in a consolidating market, such as Cushon or Nest. The People’s Pension – originally set up for workers in the construction sector – did not put similar emphasis on climate investing until now. It was recently ranked 19th out of 20 in an assessment of master trust climate strategies by campaign group Make My Money Matter.