UK Pension Fund Moves $35B To Amundi, Invesco For ESG

The People's Pension (TPP), the UK's largest workplace pension scheme, has significantly diversified its investment policy by hiring Amundi and Invesco to oversee £28 billion (USD$35.5 billion) of assets. The action signals TPP's increased focus on responsible investment, as it now particularly emphasizes climate-sensitive and net zero-aligned equity and fixed income investments.

State Street had been TPP's sole asset manager in the past. But the move by the pension fund to commit most of its £32 billion portfolio to new managers reflects a wider commitment to linking investments to its stewardship priorities. It comes after a refresh of TPP's Responsible Investment policy last year, which identified key areas of focus as climate change, conservation of nature and human rights. The policy established strict guidelines for asset managers to hold companies accountable for their sustainability pledge and to make net zero-linked voting guidelines.

As reported by Mark Condron, Chair of Trustees for The People's Pension, the change is a key move in striking a balance between financial performance and ethical investment values. He underlined that the appointment of Amundi and Invesco is evidence of the pension fund's dedication to sustainability, active stewardship, and long-term value creation for its almost seven million members.

Dan Mikulskis, People's Partnership Chief Investment Officer, also expressed these sentiments, commenting that both asset managers possess extensive experience and share TPP's high commitment to responsible investing. The new hires will have Amundi manage £20 billion of developed markets equity under a climate-driven index mandate, while Invesco will manage £8 billion of fixed income investments. Invesco's strategy will combine net zero alignment, ESG analysis, and active engagement with issuers to advance sustainable business conduct while guaranteeing long-term returns.

Aside from handling equity investments, Amundi will also give TPP necessary ESG data, metrics, reporting, and analytics through its Amundi Technology ALTO platform. This data-centric strategy is designed to enhance TPP's capacity to monitor and evaluate the environmental and social footprint of its investments.

Jean-Jacques Barbéris, Head of Institutional & Corporate Clients Division and ESG Supervisor at Amundi, highlighted the increasing demand from clients for bespoke investment solutions that deliver strong risk-adjusted returns alongside a firm commitment to responsible investment. He expressed gratitude for TPP’s trust in Amundi, emphasizing that the partnership is a reflection of the firm’s wide-ranging investment solutions and its ability to support TPP’s net zero ambitions.

The move to reorganize asset management is in sync with the larger trend of pension funds incorporating ESG considerations into their investment decisions. As stakeholder expectations and regulatory pressures keep changing, institutional investors are increasingly focusing on sustainability-led practices that not only generate financial returns but also help create favorable environmental and social impacts.

Through the appointment of Amundi and Invesco, TPP is doubling down on its position as a responsible leader in pension fund management. Through integrating climate and ESG into its investment approach, the pension fund seeks to make a tangible impact while promoting strong financial returns for its members. This new strategy is the recognition of increased understanding across the financial sector that sustainable investment is not a specialty tactic but rather a fundamental building block of long-term value creation.