Nest, which currently manages more than £16bn of UK pension savings, has partnered with Octopus Renewables to boost investment into clean energy infrastructure.
The automatic enrolment scheme managing Nest said via the partnership it will directly investing in green energy generation that will aim to provide secure stable, long term returns for pension savers while helping achieve its ambition of becoming a net-zero carbon investor.
Octopus Renewables is the largest investor of utility scale solar power in Europe, also invests in onshore wind and biomass in the UK, according to a statement announcing the deal. Managing a global portfolio valued at more than £3bn, the firms runs a diverse portfolio of technologies, including several rooftop solar assets in Manchester and Birmingham, and wind farms in South Lanarkshire and Northamptonshire.
For the Nest portfolio, Octopus will arrange investment deals directly with the owners of renewable infrastructure projects, negotiating bespoke deals. The mandate will target deployment into renewable energy projects and associated infrastructure, predominantly in the UK and Europe to support the transition to a net zero economy.
Mark Fawcett, Nest’s chief investment officer, commented: “We want to invest in the energy of the future, not the past. The money we manage on behalf of our members needs to provide steady returns for the next 10, 20, 30 years.
“Renewable energy projects are fantastic opportunities. Every new site provides greater energy security, increases potential returns and contributes to tackling the climate emergency. We want to deliver bigger pensions for our members, in a better world.
“Investing in British green energy means our members will be investing in projects they can see and touch, a tangible connection to their pension and a way out of the climate crisis.”
Alex Brierley, co-head of Octopus Renewables, added: “This partnership will create a strong platform for Nest, covering a diverse range of technologies, geographies and assets across their lifecycle, whether that be at development, construction or operational stages. The fund will also allocate capital to growth opportunities in the wider energy transition.”
Nest highlighted YouGov data from a July 2020 survey of 2,010 UK adults 79% said it is important the economic recovery from coronavirus should take climate change into account. Furthermore, 65% of pension savers believe their pension should be invested in a way that reduces the impact of climate change and just 4% strongly disagreed.
Tony Burdon, CEO at Make My Money Matter, said the deal set a “powerful example”: “Not only has NEST made a robust commitment to net zero by 2050 at the latest, with an expectation to halve emissions by 2030, they are now leading the way in using their influence to actively build a healthier world for the next generation. In making a substantial investment in clean energy solutions, NEST has just set a powerful example of how our pensions can be a force for good, tackling the climate emergency and helping us build back better from Covid.
“This move also addresses the financial risk associated with continuing to invest in oil and gas, shifting investment into the new and greener commercial opportunities of the future. Ahead of COP26, we call on all major UK pension schemes to follow NEST’s lead by committing to net zero and by growing their green investment portfolio.”
Minister for Pensions Guy Opperman, added: “I welcome the decision by Nest to expand into innovative and green markets, and this should encourage other schemes to make the same leap. Nest’s action shows that schemes with economies of scale can access alternative investments, including renewable technologies, at a low cost to their members.”
