Why do we exclude companies from our investments?

Investments team
March 2022

Being a responsible investor means two things to us. First, we have a duty to deliver good investment outcomes for our customers. Second, we should do this in a sustainable way, using our influence to help build a better future for everyone. Part of this means not investing in specific companies or types of industries if they’re involved in certain activities we believe pose too much of an investment risk. Our exclusions policy sets out what we won’t invest in.

Whenever possible, we’d rather talk to the senior management of a company if we believe it needs to improve its environmental, social and governance (ESG) performance. If we simply exclude companies from our investments without doing this, we lose the chance to help them evolve into more sustainable businesses, and potentially lose out on any investment gains as a result.

But there are some companies involved in activities that cause such harm to society or the planet they pose an unacceptable investment risk. These companies could be hit with large fines, increased costs, or simply fall out of favour with investors and the public. This would limit their ability to succeed and could lead to significant falls in their share prices and ultimately your pension savings. Some might even become what is known as ‘stranded assets’, meaning they become un-investable as things like regulation - such as laws to protect the environment - become more stringent and stifles growth opportunities.

So what sort of companies or businesses are on our exclusions list?


Companies involved in this sector are now facing greater levels of government scrutiny and legal action than ever before. Demand is also falling from both consumers and investors - our own research from 2018 and 2020 showed tobacco was low on our customers’ priorities. And, unlike fossil fuels, there is no transition plan for tobacco companies to develop into more sustainable businesses.

Because of this, companies in this sector’s borrowing costs have risen, and their share prices have fallen to below that of many other comparable sectors. So, we believe it’s no longer viable to include companies which generate more than 10% of their revenue from tobacco and tobacco-related products in our Investments.

Controversial weapons

These are weapons prohibited by international conventions, and include anti-personnel landmines, cluster munitions (weapons that eject explosive bomblets designed to kill personnel, and destroy vehicles or infrastructure), and chemical and biological weapons. These weapons are associated with causing severe harm to civilians during and after conflict, so we won’t invest in companies which manufacture any of these.

United Nations Global Compact (UNGC) violators

The United Nations Global Compact supports companies committed to responsible business practices in the areas of human rights, labour, the environment, and anti-corruption. It promotes activities that contribute to sustainable development goals to create a better world. We exclude any businesses in breach of UNGC principles.

Thermal coal and tar sands operators

As part of our broader Climate Action Plan, we won’t invest in companies where 5% or more of their revenue comes from thermal coal extraction and/or tar sand operations. These processes are among the highest carbon-emitting means of generating power, so they go against our climate change commitments.

We don’t exclude all high carbon-emitting businesses, or every business in a high-carbon-emitting industry - but focus on those we feel present too high a risk. Instead, we prefer to engage with companies to encourage them to reduce their carbon emissions wherever possible.

Find out more about our Exclusions Policy.

Pensions are a long-term investment. The retirement benefit(s) you receive from your pension will depend on a number of factors including the value of your plan when you decide to take your benefit(s) which isn’t guaranteed and can go down as well as up. The value of your plan could fall below the amount(s) paid in.