Railpen, one of the UK's largest corporate defined benefit pension funds, sold its stake in global food and beverage company Nestlé last year, citing concerns over the firm's transition planning and its decision to leave an industry coalition focused on tackling methane emissions.
Railpen, which manages around £34bn on behalf of the Railways Pension Scheme, one of the UK's largest defined benefit pension schemes, has sold its stake in Nestlé confirmed the divestment in its latest Stewardship Report, released earlier this week. Railpen said the decision followed several years of engagement with Nestlé, during which it saw limited progress on key issues.
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"We observed limited responsiveness to investor feedback and limited progress against the areas we had highlighted," Railpen said in the report.
The fund added that its decision was driven by a combination of concerns, including share price valuations, governance stability and the management of material environmental, social and governance (ESG) risks. Nestlé's share price has dropped by more than 30% over the past five years, due to a combination of changing consumer habits, inflationary challenges and investor concerns over governance issues.
Nestlé's departure from the Dairy Methane Action Alliance in 2025 proved to be a key turning point. Railpen said the move raised questions about the robustness of the company's climate strategy and its commitment to reducing emissions across its supply chain.
Nestlé is one of the world's largest dairy processors, and milk and dairy ingredients account for the largest share of its overall carbon footprint. Methane emissions from the company's cattle supply chains are estimated at around 8.7 million tonnes of CO2 equivalent (CO2e), according to research by the Changing Markets Foundation. The organisation estimates this is roughly double the emissions of Switzerland's entire livestock sector.
The dairy industry is a significant contributor to global methane emissions, accounting for around 10% of human-caused methane output. As methane is a particularly potent greenhouse gas, investors and policymakers are increasingly focusing on reducing emissions from agricultural supply chains as part of broader climate transition efforts.
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