Aegon UK partners with HSBC Global Asset Management to embed ESG criteria across its in-house workplace default funds

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  • Aegon UK takes a further step towards its net zero carbon emissions 2050 target today with the launch of an ESG component for its in-house workplace default range for Aegon Retirement Choices (ARC)
  • Aegon UK will take advantage of HSBC Global Asset Management’s long-standing experience in responsible investing to embed Environmental, Social and Governance (ESG) criteria across its in-house workplace default funds
  • ARC workplace default funds will introduce a significant ESG proportion, 30% initially, as part of a longer-term programme to add ESG exposure across its default range. By the end of this process, Aegon will have around £1.7 billion invested in the new fund

Earlier this month, Aegon UK announced its intention to achieve net zero carbon emissions across its default fund ranges by 2050, and to explore the practicability of achieving the milestone of halving emissions by 2030.

As an early step towards these targets, Aegon UK has partnered with HSBC Global Asset Management as part of a new initiative to embed ESG criteria across its in-house workplace default range for ARC schemes. This leverages HSBC Global Asset Management’s considerable experience in both responsible and passive investing and is a key step in Aegon UK’s plans to fully embed ESG criteria across its default fund range.

From January, key ARC workplace default funds will start to invest in the newly launched HSBC Developed World Sustainable Equity Index fund, reaching a total of around 30% of assets for members in the growth stage within six months. Aegon UK is the first investor in the fund, which is a low-cost solution designed to track the performance of the FTSE Developed ESG Low Carbon Select Index before charges.  Those nearing retirement and invested in the Aegon Workplace Default Retirement fund will have 15% invested in the ESG component on completion of the process, which will see around £1.7 billion invested in the new fund.

The new HSBC fund targets three areas of improvement with the investments it makes – a 20% uplift in ESG score* as well as a 50% carbon emissions and fossil fuel reserves intensity reduction, relative to the parent index It aims to deliver on these targets without adding risk to the portfolio by keeping tracking error low.

The fund excludes companies that operate in specific sectors (e.g. controversial weapons and tobacco production) or those that generate significant levels of revenue from activities such as thermal coal, gambling and adult entertainment. It also incorporates a custom exclusion list based on company performance against the 10 principles of the UN Global Compact.

This change builds on last year’s addition of ESG to its LifePath default funds for Master Trust and TargetPlan customers and now means that both Aegon’s workplace propositions include a significant ESG allocation in their respective default funds.

Tim Orton, Managing Director for Investment Solutions at Aegon said:

“We’ve become increasingly aware of our customers’ desire to invest not just for their own future prosperity, but to also make an impact with it, and this is something that we also feel passionate about. HSBC Global Asset Management has strong credentials in sustainable investing, which was a key consideration for us when embarking on such an ambitious programme of change across our default range. We are pleased to be partnering with HSBC Global Asset Management in this initiative as we continue to improve our range of sustainable and ethical solutions to meet our customers’ needs.”

Stuart White, UK and International CEO at HSBC Global Asset Management said:

“The transition to a lower-carbon economy is underway and our priority is to develop solutions that will enable our clients to participate in this transition. Our partnership with Aegon UK is an important milestone in achieving this goal and testament to our expertise in responsible investing.

“As the latest addition to our sustainable fund range, the HSBC Developed World Sustainable Equity Index Fund is ambitious in its approach as it focuses on not just one but three areas of improvement, allowing for the underweighting of less desirable stocks without excluding them entirely. This aligns with our approach of supporting companies as they transition to become more sustainable.”

 

Aegon default workplace funds affected:

Aegon Workplace Default growth and retirement funds

Growth Tracker (Flexible, Annuity and Cash Target) – growth funds

Equity & Bond Lifestyle – growth fund

GPP Default – growth fund

Stakeholder Default – growth fund

There’s no guarantee fund objectives will be met. The value of a member’s pension plan can fall as well as rise and isn’t guaranteed. They may get back less than the amount invested. Although there is no fixed term, customers must be prepared to invest for the medium to long term of at least five years, ideally longer.

 

References 

* As measured by the FTSE Russell ESG Ratings model - https://www.ftserussell.com/data/sustainability-and-esg-data/esg-ratings

 

Further information

Jonathan Henderson

Head of PR

Aegon UK

jonathan.henderson@aegon.co.uk

 

Notes to Editors

  • In the UK, Aegon offers retirement, workplace savings and protection solutions to over three million customers. Aegon employs around 2,000 people in the UK and together with a further 800 people employed by Atos, we serve the needs of our customers. More information: www.aegon.co.uk  
  • Aegon’s roots go back more than 175 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in the Americas, Europe and Asia. Today, Aegon is one of the world’s leading financial services organisations, providing life insurance, pensions and asset management. Aegon’s purpose is to help people achieve a lifetime of financial security. More information on www.aegon.com
  • Figures correct, January 2021