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ESG

NEST divests from companies not shifting to low-carbon future

National Employment Savings Trust, London, withdrew £27.2 million ($35.2 million) in investments from companies that haven't made progress on adapting for a low-carbon future and pose a risk to members' returns, the plan said in an annual report on responsible investment published Monday.

According to the report, in 2017 NEST invested the £27.2 million in companies that are positioned to benefit from a global transition to a low-carbon economy instead, including PG&E, Iberdrola , Vestas Wind Systems and Siemens Gamesa Renewable Energy. NEST did not identify the companies it divested.

The £1.8 billion national workplace defined contribution plan called for higher environmental and corporate governance standards at companies on behalf of millions of U.K. investors in the report.

"We want to see the industry continue to work together and push for higher standards so all pension savers can benefit from a more profitable, sustainable and environmentally sound capitalism," Mark Fawcett, chief investment officer of NEST, said in a news release.

In addition, NEST said it exercised 291 votes against management at companies where it is invested as of the end of the first quarter of 2017. The plan voted independently in 18 cases, including against executive pay at Barclays and in response to poor progress on gender diversity at Glencore. The rest of the votes were through managers.

"We're concerned about elements of corporate pay," Mr. Fawcett said. "Executive pay can't be set in a vacuum. If pay is disproportionate, incentives are opaque or in some cases pay policies are being structured to get around the rules, these pose clear risks to long term investors like our members."

"We've also taken a strong stance on gender diversity. Gender diversity at board level is a proven factor in better corporate performance, so we should be worrying about male-dominated boards that might undermine returns for our members," Mr. Fawcett added.

NEST invests for 5.4 million workers automatically enrolled by more than 440,000 employers across the country. The plan said in the report that more than a quarter of the employers surveyed by NEST looked for a responsible investment approach as a sign of high quality when choosing their auto-enrollment plan.