The Trustees of the Cushon Master Trust, who claim to be the world’s first completely net-zero pension, have unveiled their new investment strategy.
The strategy is designed to reduce investment risks and improve the outcomes of those who pay into the service.
Cushon’s new strategy is said to increase the potential for greater investment returns by focusing on greener companies that are expected to become increasingly profitable in the long term.
To do this, Cushon has committed to the largest allocation to private markets in the UK Master Trust sector. This means that the pension company is investing more in private businesses than any other provider in the UK.
Cushon will now have the largest defined contribution allocation to private markets (15%) and social impact across 100% of its portfolio. The 200,000 members of Cushon will now see their pensions invested in environmental projects, such as the planting of new sustainable forests, financing new wind farms, green hydrogen, and solar farms.
This focus is said to reduce the investment risk because it diversifies funds and ensures members’ money is safeguarded against lower returns from ‘brown’ (carbon-emitting) investments. This is particularly important as the global economy transitions to net zero over the next few decades.
Environment and people
Being proud of the company you work for and aligning ethically is becoming a prominent theme in workplaces.
In fact, global marketing agency LEWIS surveyed 2,600 people between the ages of 18 and 25 and found that 54% of those surveyed said that they would refuse to work for a company that doesn’t share their values.
With this kind of focus on company values, the kind of pensions offered by Cushon could be leveraged by companies who want to have a positive environmental impact and attract talent with these kinds of pension offerings.
This is supported by a claim by Ben Pollard, founder and CEO of Cushon, who said that research conducted by Cushon found that 62% of employees would engage more with their saving funds if they knew their pension was having a positive impact on climate change.
Speaking about the investment strategy, Ben Pollard said: “A good number of people will be able to name their pension provider, but a miniscule proportion will be able to name the underlying investments.
This passive relationship has become the industry norm, but it’s one of the reasons there is apathy, particularly among younger savers. We need a new approach that places saver engagement at the heart of the pensions industry.
“That’s why a big focus of our new investment strategy includes, for the first time for the defined contributions market, connecting savers with investments in projects and companies that they can feel proud of and engage with. ”
Cushon’s strategic adviser, Julius Pursaill, added: “Private markets increasingly offer sources of return that listed markets don’t – forestry and microfinance for example, as well as private equity – these give members access to better diversification, higher expected returns and ultimately significantly improved investment outcomes.
“We will deliver regular updates to members about the positive change their pension savings are delivering for the planet and look forward to announcing novel ways our members will be able to engage with these investments in the coming months.”
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