U.K. defined contribution multiemployer plan NOW: Pensions, London, pledged to reduce the carbon emissions of its portfolio by half by 2030, a spokeswoman confirmed.
The £2.5 billion ($3.5 billion) plan said that in efforts to achieve the reduction it is expanding its sustainable bonds, equities and cash allocations to at least half of its portfolio's net asset value before the end of the year.
Following a review of the plan's investment strategy earlier this year, NOW has already increased assets invested in sustainable equities to 20% from zero, sustainable bonds to 11% from 10% and sustainable cash — using a cash fund that has a sustainable tilt — to 14.4% from zero.
The fund is investing in companies that have strong sustainability characteristics and lower carbon footprints, NOW said in a news release.
As part of the move, the plan also sold its commodity exposure to fossil fuels, which had been used to provide inflation protection. The allocation was replaced with inflation-linked bonds and precious metals. The size of the divestment was not provided.
Executives at NOW will also consider further steps such as revising its stewardship expectations to achieve the target reduction.
The spokeswoman said no explicit targets had previously been set.
"NOW: Pensions strives to invest sustainably and we continue to monitor ways to be more effective and operate in a way that has a positive effect on our employees, our industry and our society. These changes put sustainability firmly at the heart of our investment strategy," Patrick Luthi, CEO, said in the release.