The pension company Scottish Widows has announced plans to divest at least £440 million from companies, which fail to meet its environmental, social and governance (ESG) standards.
The pension provider warned the figure could grow further if companies do not take action to improve the sustainability of their business practices.
Scottish Widows’ new policy targets companies which derive more than 10% of their revenue from thermal coal and tar sands, manufacturers of controversial weapons and violators of the UN Global Compact (UNGC) on human rights, labour, environment and corruption.
The firm’s move aims to protect almost six million customers from ESG-related investment risks.
Maria Nazarova-Doyle, Head of Pension Investments at Scottish Widows, said: “As a large institutional investor, we have a vital role to play in shielding our customers from ESG investment risks, as well as influencing positive change through the investments we hold.
“Our exclusions focus on companies we believe pose the most severe investment risk due to the nature of their businesses, which can’t be addressed through engagement.
“The growth of these ‘at risk’ companies is likely to be severely limited by future regulations and the changing views of customers and investors, leading to significant falls in their share prices.”