‘Our net zero voting guidelines are deliberately stretching’: how The People’s Pension is pushing its new managers

Just over a year ago, The People’s Pension made one of the most drastic stewardship alignment decisions an asset owner could take. In one fell swoop, it divested almost all of its £28bn allocation from its existing manager, State Street, appointing Amundi and Invesco instead.

The move was driven by a combination of factors. It had arguably become unsustainable for the UK’s largest independent master trust to invest almost its entire portfolio with a single manager. The fund’s assets under management have since grown to around £40bn. Meanwhile, investments through pooled funds had left little flexibility to adjust holdings, prompting the shift towards segregated mandates.

But underpinning the decision was a broader philosophy that remains unchanged, Clements explains. The People’s Pension firmly believes in appointing only a small number of managers.

“There are diminishing returns from having too many managers,” she says. “Governance and oversight become much harder, especially from a responsible investment perspective.”

NZI Transition Equities Summit |15 April 2026 | London | Register here

Asset growth strengthens influence

Conversely, the fund believes that as its assets grow, so does its ability to influence manager behaviour.

“If you have enough assets under management, the ability to influence manager behaviour increases massively,” Clements says. “That’s a big part of our model — working with a small number of managers to build strong partnerships so we can really drive change.”

That growth is already evident. Having increased its AUM by around £10bn over the past 40 months, the fund expects to reach £100bn within the next decade.

Critics might argue that the fund has been relatively late in strengthening its climate stewardship. In 2024, campaign group Make My Money Matter ranked its climate policies 18th out of the 20 largest DC providers. That improved to 9th in 2025, at the time, it was too early for the assessment to reflect the impact of its State Street divestment and with the report no longer being published, new metrics of progress will have to be found.

An unusual approach to stewardship

Either way, the  People’s Pension’s stewardship model remains distinctive. One of Clements’ guiding principles is that asset owners cannot be “everything everywhere all at once”.

Rather than engaging directly with every holding, the fund prioritises selecting managers that are aligned with its responsible investment policy. Managers are now assessed annually on that alignment.

That alignment had clearly broken down with State Street. As manager of pooled index funds, the US firm had previously been responsible for implementing the pension’s responsible investment policies. However, it backed only 10.5% of social and environmental shareholder proposals last year, according to Morningstar data, and also exited Climate Action 100+ — both factors that influenced the pension’s decision.

Clements has also been keen to share her views with peers. As part of the UK Asset Owner Roundtable, she and 26 other asset owners — including Phoenix, Aegon, Scottish Widows and Nest — issued a joint statement in 2025 urging managers to continue supporting stewardship alliances and to improve voting transparency.

Incremental progress, not instant change

Looking ahead, progress will be gradual.

“Fund manager RI monitoring doesn’t normally work on a quarterly timeline,” Clements says. “Many of the gaps we’ve identified will play out over a three-year period, with annual progress reviews.”

Nevertheless, engagement with the new managers is already under way.

“Our net zero voting guidelines are deliberately stretching,” she says. “The focus now is monitoring alignment and working with managers to close any gaps.”

She adds: “We’ve achieved a big step forward in alignment by changing managers, so our short-term priority is to bed that in and track progress before moving to more bespoke interventions such as pass-through voting.”

However, segregated mandates give the pension greater control, including the ability to override manager votes on individual holdings.

“Because our voting policy is very prescriptive, we can directly compare how we would vote with how our manager actually voted on issues like how climate is embedded into capex decisions, lobbying or report and accounts,” she explains.

“Director accountability is central to our approach. Our net zero voting guidelines focus strongly on voting against directors where climate governance is not good enough.”

Expansion into private markets

While much of the discussion has focused on listed equities, private markets are the next major frontier.

Last year, The People’s Pension has significantly expanded its in-house investment team as it prepares to build allocations to infrastructure, real estate and private credit. While manager appointments have yet to be confirmed, the fund’s philosophy remains the same: a small number of managers running large mandates.

Further announcements are expected in the second half of this year.

The stewardship approach will remain consistent across asset classes, Clements says. In practice, this means that either she or ESG integration manager Danny Coombes sits in on manager meetings to ensure responsible investment priorities are clearly communicated and embedded from the outset of the mandate.

“We’re strengthening integration by embedding responsible investment expertise directly within our real assets team, so stewardship and sustainability are part of decision-making from the start,” she says.

Institutional Investment Conferences & Summits from Longview Networks