Aegon invests £3bn in BlackRock ESG funds

Doubling ESG exposure in default workplace pension fund

Aegon UK has invested £3bn in new BlackRock ESG funds, which will be added to the firm’s default workplace pension fund and other fund options.

The new range of six iShares ESG equity index funds target a 30% reduction in carbon emissions intensity and apply a set of exclusionary screens to limit exposure to controversial companies and track newly launched Morningstar ESG Enhanced indices covering regional and country-specific exposures. Aegon UK worked with BlackRock on the design of these funds.

Using these funds, as well as an existing BlackRock ESG fixed income fund, ESG exposure in the Aegon Workplace Default fund will double for investors still in the growth stage of their retirement journey from 30% to 60%, and increase to 40% for those in retirement. Fund charges, risk appetites and performance expectations will remain unchanged.

Tim Orton, Aegon’s managing director for investment solutions, said: “Enhancing the ESG credentials and overall exposure in our Aegon Workplace Default fund, and others, is a significant step for Aegon UK as we move closer to achieving our net-zero commitments for default funds and aligning to the Paris climate accords. Around 90% of scheme assets are often invested in passive default funds and therefore we have a responsibility to ensure our investment actions are meeting the evolving needs of our customers.”

Sarah Melvin (pictured), head of UK at BlackRock, said: “This new range will help pension savers incorporate sustainable considerations into their retirement portfolios as they look to secure their financial futures.”