National Employment Savings Trust, London, said one of its money managers, UBS Asset Management, sold holdings in five energy companies, including Exxon Mobil Ltd., that they do not see working fast enough to address climate risk, the two organizations said Monday.
"COP26 showed the need for immediate action," said Katharina Lindmeier, senior responsible investment manager for NEST, the £20 billion ($26.5 billion) defined contribution multiemployer plan, in the news release.
The defined contribution fund also announced new climate targets, including a 30% reduction by 2025 in its investment carbon footprint in public equities and fixed income. That would then represent up to 75% of NEST's portfolio.
As of July, NEST sold holdings in Exxon Mobil, Imperial Oil Ltd., Korea Electric Power Corp., Marathon OilCorp. and Power Assets Holdings Ltd. through its Climate Aware Fund, represented £40 million, or 0.25%, of its total portfolio.
As one of its fund managers, UBS has been selling shares in the five companies over the past months, according to the release.
NEST will not reconsider adding the five energy companies "until they demonstrate clear progress in preparing for the low carbon economy,," it said.
"At NEST, we aim to work with companies to encourage sustainable business decisions but will draw the line somewhere. The five companies being excluded have not done enough to convince us that we should remain shareholders," said Ms. Lindmeier. The pension fund's new short-term climate targets demonstrate "that we're not hanging around. We want to be on the front foot for such an important issue like climate change to achieve better risk-adjusted returns for our members."
UBS AM has excluded the companies across all of its Climate Aware funds and its actively managed equity and fixed income sustainability funds, according to the announcement . The decision to drop them came after three years of engagement with 49 oil and gas companies identified as climate change laggards. That resulted in 60% of the companies making progress addressing climate risk, the release said.