The Barclays Bank UK Retirement Fund (Barclays UKRF) has integrated ESG factors and climate risk into a £1.3bn diversified growth fund (DGF) portfolio used for its defined contribution (DC) scheme.
The DGF - managed by BlackRock's factor-based strategies group - is the main building block within the default option of the Barclays UKRF's DC plan.
The trustees of the scheme said the integration reflects the scheme's responsible investment policy and introduces explicit focus and application of ESG factors into investment decisions to better manage risks, including climate change, and generate sustainable, long-term returns for members.
It said that, as part of the move, enhanced ESG characteristics have been introduced as additional investment criteria and will be used to screen investments in the growth fund to identify material ESG risks and future growth opportunities.
The scheme added that the DGF will target investments that represent material improvements in measures of ESG and carbon emissions intensity.
Barclays UKRF trustee board chairman Peter Goshawk explained: "There is compelling evidence that sustainable business practices lead to better returns, lower risks, and improved outcomes for members in the long-term.
"The changes we implemented on the growth fund align with the trustee's responsible investment policy and principles, and they are expected to have a positive impact on the long-term performance of the growth fund. At the same time, members' pension savings will face less ESG and climate change risks, and will support the transition to a lower carbon economy."
BlackRock UK institutional client business head Jennifer Ryan added: "The transition to an ESG-optimised strategy marks an exciting inflection point for the growth fund and we are proud to have partnered with the trustee of Barclays Bank UKRF to help them achieve this milestone.
"With climate-related risks at the top of the agenda for many investors, this new and innovative strategy applies ESG factors into investment decisions to better manage material risks, such as climate change, and give members access to more sustainable long-term returns as they save for their retirement."
