Multi-employer master trust pension fund National Pension Trust (NPT) is to move its default investment to an ESG guided strategy this month.

The savings of over 44,000 members with other £987m in assets will be shifted to a strategy that will be guided by environmental, social and governance principles.

The ESG default arrangement will focus on climate change and carbon transition. It will also aim to invest members’ savings aligned with the UN’s sustainable goals.

NPT, powered by XPS Pensions Group, will partner with State Street Global Advisers, the Transition Pathway Initiative, and Legal & General Investment Management to align its portfolio with the goals of the Paris Agreement and inform its investment research.

Paul Armitage, head of the National Pension Trust, said: “Climate change poses a real risk to our future, which is why we want to make the way we invest assets more sustainable. 

“That’s why we have selected the TPI – it achieves our initial goals for reduced carbon exposure today, reducing carbon related metrics by c. 50% now - but also incentivises a transition to future lower carbon intensity for businesses around the world by allocating capital to those firms that do it best.”

The strategy will be based on an index-based solution, enabling NPT to improve the portfolio’s carbon profile while maintaining target returns.