Pensions giant Scottish Widows has announced it will scrap nearly $2bn of tobacco and coal investments over fears that they will become “stranded assets”, as investors and consumers increasingly shun the sectors.
Scottish Widows, part of Lloyds Banking Group, is cutting the investment on the grounds that they pose a threat to its environmental, social and governance (ESG) goals.
Bosses said the criteria will extend to any firm that derives more than 10 per cent of its revenue from the tobacco interest.
“Industries such as tobacco are at severe risk of becoming stranded assets, as they face intense pressure from investors, regulators and consumers, and consistently fail to properly address the social impacts of their products and within their supply chain,” said Maria Nazarova-Doyle, head of pension investments and responsible investments.
Scottish Widows, which has £190bn in assets under administration, also said it cut the revenue threshold for investing in firms connected to thermal coal and tar sands, the most polluting of fossil fuels, to 5 per cent of revenue from 10 per cent.
The announcement comes after the firm last month became the first major pensions provider to roll out plans to decarbonise its investment portfolio and halve emissions by 2030 as it becomes the first major pensions provider to confirm a net zero strategy.
Bosses laid out a series of commitments to hit net zero by 2050 including investing £20-25bn into “climate aware investment strategies’, and “excluding high carbon investments from its portfolio.
Pensions providers have also been scrambling to dump Russian investments, with Scottish Widows committing to dumping its assets last week.