State-backed pension fund, The People's Pension, withdraws £28bn from financial institution State Street, citing disagreements over corporation's investment approach and governance.
The People's Pension, a UK DC master trust with over £30bn in assets, has announced a significant shift in its investment strategy, moving away from State Street and appointing Amundi and Invesco to manage the bulk of its assets.
The decision, influenced by a perceived misalignment on climate stewardship, marks a clear commitment by The People's Pension to responsible investment. The master trust, through its fiduciary manager TPT Investment Management (TPTIM), takes a strong and transparent position on climate stewardship, as reflected by its UK Stewardship Code signatory status and active engagement policies.
TPTIM's commitment to responsible investment involves integrating stewardship into its governance framework, engaging proactively with asset managers and investee companies to influence behaviour and improve sustainability standards, and developing climate transition action plans to address evolving sustainability risks. The master trust also collaborates with industry groups and policymakers for broader positive change.
The move towards segregated mandates will provide The People's Pension with more control over its investments and voting rights. Amundi, which will manage the master trust's £20bn passive equities portfolio, ranks 6th out of 70 in ShareAction's Voting Matters score, indicating strong support for social and environmental resolutions. Invesco, responsible for more than £8bn in active fixed income investments, has not been ranked by ShareAction in the latest Voting Matters report.
State Street, on the other hand, ranks 63rd out of 70 in the same report, indicating very little backing for social and environmental resolutions. Over the past three years, State Street's backing of ESG resolutions has fallen from 30% in 2021 to 9% in 2024, according to ShareAction.
Leanne Clements, The People's Pension's head of responsible investment, has been at the forefront of coordinating a statement on climate stewardship among long-term asset owners. The shift towards investing through segregated mandates will offer the master trust a lot more control on voting and stewardship, allowing for adjustments around the edges if necessary.
The master trust has expanded its investment team to more than 20 and plans to commit some £4bn to private markets by 2030. The pension fund has also transitioned £28bn of its assets into segregated mandates held by Northern Trust.
Mikulskis, the master trust's CEO, emphasized that responsible investment considerations played a key role in the appointment of Amundi as passive equity manager. State Street Global Advisors remains in charge of the remaining £5bn of the portfolio.
The People's Pension has issued a new guideline on stewardship alignment, expressing concern over managers publicly backtracking from their climate pledges. However, the master trust has yet to confirm direct investments in climate solutions.
In a statement, State Street's spokesperson responded to the announcement, stating that the company remains focused on growing its franchise in the UK DC and other markets. The People's Pension's departure from State Street is a clear indication of the growing importance of climate stewardship and responsible investment in the UK pension industry.
[1] TPT Investment Management - UK Stewardship Code Signatory [2] The People's Pension - Responsible Investment
- TPT Investment Management, the fiduciary manager of The People's Pension, demonstrates its commitment to responsible investment by being a UK Stewardship Code signatory and actively engaging with asset managers and investee companies to promote sustainability standards.
- In their new investment strategy, The People's Pension prioritizes responsible investment, shifting focus from State Street to Amundi and Invesco, with Amundi ranked 6th in ShareAction's Voting Matters score and Invesco managing more than £8bn in active fixed income investments.
- Recognizing the importance of climate stewardship, The People's Pension has expanded its investment team, plans to commit £4bn to private markets by 2030, and has transitioned £28bn of its assets into segregated mandates held by Northern Trust, offering more control over voting and stewardship to steer investments towards environmental-science and climate-change solutions.
