The Co-op Group’s defined contribution (DC) pension scheme, known as Pace DC, has a responsible investment policy which its trustee reviews annually.
The organisation operates across food retail, funerals, insurance, and legal services. With 2,300 food stores and 800 funeral homes, it also supplies products to 6,000 other outlets and employs 55,000 employees.
Its policy details environmental, social and governance (ESG) factors, which include climate change, strategic investment and decision-making process. The trustee implements the responsible investment policy through its investment managers, which are also assessed on their performance and consideration of ESG initiatives, engagement with investee organisations, and public disclosure of the policy.
Its Pace DC scheme offers funds with ESG tilts via its default investment strategy, meaning that it has chosen a higher percentage of ESG investments than non-ESG in its portfolio, explains Gary Dewin, people and pensions director at Co-op.
“The Future World Multi-Asset Fund employs a strategy that tilts investments towards organisations with higher ESG scores and excludes those that fail to meet specific criteria,” he says. ”This approach ensures that members’ contributions are invested in a manner consistent with responsible investment principles. The Pace Growth Shares 2021 Fund takes into account the environmental and social behaviours of businesses they invest in, as well as how well they are governed and run, when deciding how much to invest in different organisations.”
In addition, the trustee recognises that some members wish to take account of ethical issues or personal religious beliefs in their investments, so it offers an ethical equity fund, the Pace Growth Ethical Shares Fund, and an Islamic equity fund, the Pace Growth Shariah Fund.
Co-op’s responsible investment strategy was designed to align with its ethical principles by incorporating ESG criteria into the investment decision process. The scheme’s responsible investment options seek to invest in organisations with sustainable practices and positive social impact, while avoiding or excluding conflicts with both the employer’s and members’ values and principles.
The pension scheme emphasises transparent communication when updating and reporting on investment strategies and performance, and regularly reviews investment strategies and policies to adapt to responsible investment practices, to remain relevant and effective, adds Dewin.
“By integrating these measures, the pension scheme ensures that its responsible investment strategy aligns with the organisation’s values and meets the expectations of its members. Pace is also a signatory to the UK Stewardship Code, which demonstrates a commitment to responsible investment and effective stewardship,” he adds.
