One of the UK’s biggest pension funds, The People's Pension, has decided to shake things up by moving £28bn away from State Street. Instead, it’s putting its money into two firms it sees as more committed to sustainable investing.
The change comes at a time when many investors are noticing a clear difference between US and European asset managers. Following the political shifts after Donald Trump’s election, some US firms have stepped back from strong environmental and social policies. Dan Mikulskis, chief investment officer at People’s Partnership (which runs the pension), said these differences have become so obvious that it was easier to pick partners that truly match the fund’s values.
Adding to the debate, a group called ShareAction recently criticised big names like State Street, BlackRock, Fidelity, and Vanguard. They pointed out that last year, these firms only supported 7% of shareholder resolutions on environmental and social issues - raising concerns about their commitment to real change.
After a long review of how it invests, The People’s Pension chose to give a £20bn equity mandate to Amundi and shifted £8bn in bonds to Invesco - leaving just £5bn with State Street. The fund, which has nearly 7 million members and manages about £33bn (with expectations to hit £60bn soon), wants its investments to do more than just make money. It also wants them to help the environment and society.
Mark Condron, the pension’s chair of trustees, explained, “by choosing Amundi and Invesco, we’re putting sustainability and long-term value first.” In other words, the fund believes these companies are better at looking after the planet and keeping an eye on the future.
Amundi mentioned that its focus on responsible investment played a big role in winning the mandate, promising a strong push on climate-related issues. Invesco is set to manage bonds with an eye on reaching net zero targets and engaging actively with companies on ESG matters.
Not to be left out, State Street said it’s planning to concentrate on growing its business in UK pension schemes and other areas. They’re optimistic about the future and look forward to working with The People’s Pension on the assets that remain.
Overall, this move by The People’s Pension shows that more investors are beginning to care about how their money is used - not just to make profits, but also to support a healthier, more sustainable world.
Pension funds globally held approximately $58.5 trillion in assets at the end of 2024, and The People's Pension is an inspiring example of how these assets can realistically support the transition to net zero while still generating returns for clients.
For context, the net zero transition will likely cost $9 trillion per year until 2050, creating returns, jobs and growth, while the cost of inaction could amount to around $30-60+ trillion per year by and from 2050 into the second half of the century, according to several sources such as the Institute and Faculty of Actuaries and AP News.
This insight was adapted from an original article by the Financial Times: Top UK pension fund pulls £28bn from State Street over ESG retreat
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