DC in focus: Sustainable investment in 2024

As new research suggests that breaching the 1.5°C climate threshold looks increasingly likely, defined contribution (DC) pension scheme providers must step up and provide greater transparency on how they're addressing climate risks for their members. 

Although some providers are becoming increasingly sophisticated in their approach, the growing politicisation of sustainability-related issues is presenting significant challenges. Providers are feeling the pressure to prove they're serious about sustainability in a world that's only getting more complicated.

"This is why we've simplified the complexity - to help you make sense of the key factors shaping providers' sustainability strategies and what these mean for your members. We've also outlined the essential questions you should be asking your provider."

What’s inside

• Public sustainability leaderboards for DC pension providers exist, but we explore why they can oversimplify. We highlight the value of digging deeper with your consultant.
• Our analysis shows that, despite increasing politicisation, most DC providers still view sustainability as financially material - with a 34% rise in climate-targeted fund allocations since our first report.
• We explore providers’ exposure to managers stepping back from climate initiatives - now affecting 35% of growth assets on average. It’s imperative to understand your provider’s exposure and response to this changing world.
• While many DC pension providers are growing, we show that scale doesn’t always mean sophistication - and spotlight those taking a more advanced approach.
• We look at how providers are embracing their stewardship role through coalitions and why pension schemes are well-positioned to stay the course amid political uncertainty.