Lombard Odier called in to build £5bn ESG fund for UK pension savers

One of the UK’s biggest pension schemes has called in Lombard Odier to build a £5bn ESG fund to pump into companies tackling climate and social issues.

Nest, which represents around a third of the UK workforce and some £36bn in assets, announced today it had appointed the Swiss investment giant to invest in firms facing issues like “climate change mitigation and adaptation, natural capital and social issues”.

The Swiss money manager saw off 29 firms to win the mandate from Nest and is now aiming to have around £5bn invested in the fund by the end of the decade.

“We want to be investing in companies at the forefront of this transformational change,” said Nest’s investment chief Liz Fernando.

Nest was set up by the government in 2010 in the wake of the government’s pension reforms and reports into parliament through the Secretary of State for Work and Pensions. The scheme has around 11m members according to figures from 2022.

Around half its portfolio is currently invested in listed equity funds which are managed in in line with “a transition to net zero by 2050”, the firm said.

“We look forward to helping Nest members navigate risks and identify the investment opportunities that are emerging from this transition,” Lombard Odier’s UK chief Jasbir Nizar said in a statement today.

The appointment comes amid a global souring on ESG over the past two years however as investors grow sceptical of greenwashing and markets are roiled by inflation and rising interest rates.

Environmental, social and governance focused funds experienced $2.5bn (£1.96bn) of outflows in the final three months of last year, as US investors pulled a record $5bn from sustainable funds. European investors still put $3.3bn of new money into the funds, however, according to Morningstar data.