Scottish Widows to divest £3bn from non-ESG firms

Written by Adam Cadle

28/03/2022

Scottish Widows is adding an extra £1.5bn worth of exclusions to its investment policy, bringing its total divestment from firms posing ESG risk to almost £3bn.

These new divestments build on the £1.4bn-worth of previous exclusions applied to Scottish Widows’ investments. The insurer said it will not invest in any company deriving more than 10% of its revenue from tobacco. This 10% threshold means that all tobacco manufacturers and major distributors are excluded, without hampering investment in companies from other industries that may derive a small amount of revenue from tobacco, such as supermarkets.

Scottish Widows is also bolstering its exclusionary stance toward carbon-intensive industries.
The company has updated its exclusions policy to lower the threshold for extraction of thermal coal and tar sands from 10% of revenue to 5% to reflect the progress made by the leaders in the sector.

Maria Nazarova-Doyle, head of pension investments and responsible investments at Scottish Widows, said: “Taking the long view, 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.

“We stand by our belief that carbon-intensive sources of energy such as thermal coal and tar sands will ultimately be replaced by greener renewable sources such as wind or solar. As such, exiting these highly damaging areas and redirecting capital to more climate-aware investments makes perfect investment sense.”

Implementing these changes, Scottish Widows has worked closely with FTSE Russell to construct a range of new bespoke screened indices for its passive funds which will be managed by BlackRock. Alongside the tobacco and carbon exclusions, these new indices cover existing screens from Scottish Widows’ policy – including holdings in manufacturers of controversial weapons and United Nations Global Compact violators.

The new indices will cover more than £20bn worth of assets under management.

Related Articles