Fund empowers institutional investors to support climate transition risk in mainstream equity portfolios
GLASGOW, 3 November 2021 – LifeSight, Willis Towers Watson’s defined contribution master trust, is investing nearly $1bn in Willis Towers Watson’s Climate Transition Index (CTI) fund for mainstream mobilisation towards its climate goals.
Based on the ground-breaking STOXX Willis Towers Watson Climate Transition Index, for the first time investors can support climate transition risk within their mainstream equity portfolios while also supporting net zero alignment.
The LifeSight investment is being announced on Finance Day of the CoP26 Climate Summit in Glasgow as Willis Towers Watson CEO John Haley is due to speak on the summit stage with CoP26 President Alok Sharma on the need to redirect the Invisible Hand of economics to shape a resilient future.
“This fund and the opening investment embodies the new climate smart economics and finance for the structural changes we need in mainstream markets”
John Haley
CEO of Willis Towers Watson
John Haley, CEO, Willis Towers Watson, said: “This fund embodies the new climate-smart economics and finance for the structural changes we need in mainstream markets. I’m delighted that we bring this practical solution that meets the high ambitions expressed on CoP Finance Day.”
The CTI fund is a UCITS vehicle that has been launched through AMX (the “Asset Management Exchange”), an affiliate of Willis Towers Watson. The fund tracks the STOXX Willis Towers Watson World Climate Transition Index, which makes a forward-looking, bottom-up evaluation of transition risk and opportunity for each company.
The index looks beyond carbon emissions to provide a more sophisticated way of managing climate risk, using its Climate Transition Value at Risk (CTVaR) methodology to analyse the impact that moving to a low carbon economy, aligned to the Paris agreement, will have on projected company cash flow.
The CTI fund received regulatory approval at the end of October and LifeSight’s investment will take place in several stages by the end of this year. It will be joined by approximately $75m of investment from other Willis Towers Watson clients, amounting to a total of approximately $1bn investment from defined contribution and defined benefit sources by the end of 2021.
Fiona Matthews, Managing Director, LifeSight, said: “LifeSight’s investment in the CTI fund is the next stage in our journey to reaching net zero emissions across our default investment portfolios. LifeSight has been at the forefront of sustainable investing since its inception and we understand that an orderly transition to a net zero economy is an urgent global priority.
We believe that achieving the goals of the Paris agreement are clearly in the direct financial interests of our members, so our investment in the CTI fund enables our members to benefit from the additional value created by organisations that are best placed to benefit from the transition to a low carbon economy.”
Craig Baker, Global Chief Investment Officer, Willis Towers Watson, said: “LifeSight’s investment in the CTI fund is a great example of investing in the Environmental, Social and Governance (ESG) space in a way that has a clear financial case. The fund provides a robust framework for quantifying and incorporating the financial impact of climate risk and is designed to provide investors with greater exposure to those organisations that are most likely to benefit from the climate transition and reduced exposure to those that are ill prepared.”
LifeSight was the first master trust to embed ESG into its default investment strategies. In July this year, it committed to targeting net zero greenhouse gas emissions across all of its default funds by 2050, with a 50% reduction by 2030, in line with the Paris agreement, as well as a self-select Climate Focused Fund.
Its commitment to net zero covers all its defaults, which represent the vast majority of its total assets under management, currently over £11bn. LifeSight’s full set of investment beliefs, including those regarding sustainability, are included in LifeSight’s primary governance document, the Statement of Investment Principles.
LifeSight is Willis Towers Watson’s master trust, a defined contribution multi-employer pension trust for employers who would benefit from high-quality, low-risk, market-competitive pension provision without the governance burden.
Running a defined contribution pension scheme is becoming complex and costly for a lot of employers. Governance is growing ever more onerous and schemes now have the new pension flexibilities to contend with. Companies have struggled to find a high-quality alternative that has their employees’ needs at heart. LifeSight offers the best attributes of a trust in an outsourced arrangement. Our unique solution looks after the day-to-day running of the scheme, whilst an independent trustee board looks after the interests of your members.
LifeSight gives you access to our leading-edge digitalised platform, including the award-winning ageOmeter tool, and administration services. Combined with our proven expertise in investments and communications, LifeSight is the complete package.
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.
Enables investors to address the financial risk to company share prices caused by a climate transition by building balanced, mainstream, Paris-aligned portfolios. Innovative, proprietary approach looks beyond simple strategies such as carbon exposure
