Workplace pensions giant Nest, which manages the savings of nearly a third of the UK workforce, is to boost its investment in clean energy infrastructure.
Nest has appointed Octopus Renewables, part of Octopus Group, to help it invest directly in green energy generation while securing long-term returns for savers.
The move will help Nest to achieve its ambition of becoming a net-zero carbon investor.
Octopus Renewables will arrange investment deals directly with the owners of renewable infrastructure projects, negotiating deals so Nest members are suitably rewarded for injecting new funding.
It will target renewable energy projects and associated infrastructure predominantly in the UK and Europe.
Not-for-profit scheme Nest manages more than £16 billion of UK pension savings.
It was set up by the Government to fill the gaps in pension scheme availability and ensure every UK employer can offer a workplace pension to their employees as part of automatic enrolment.
Nest estimated that £250 million will be committed this year in the UK and Europe, as part of a potential £1.4 billion investment by the end of the decade.
Chief investment officer Mark Fawcett said: “We want to invest in the energy of the future, not the past. The money we manage on behalf of our members needs to provide steady returns for the next 10, 20, 30 years.
“Renewable energy projects are fantastic opportunities. Every new site provides greater energy security, increases potential returns and contributes to tackling the climate emergency. We want to deliver bigger pensions for our members, in a better world.”
He added: “The strong foundations of this kind of investment should help (pension scheme members) achieve great returns for their future while directly investing in the future of the planet.”
Nest member Anna Perry, 41, who is chief executive of Great Western Air Ambulance Charity, said: “I’m so pleased that investments focused on sustainable energy can provide a good return as well.”
Alex Brierley, co-head of Octopus Renewables, said: “With predictable income, diversification and sustainable investment all at the forefront of institutional investors’ minds, renewable energy is an incredibly attractive asset class, for which demand is growing at pace.”
Green energy company Octopus Energy is also part of the Octopus Group. Launched five years ago, Octopus supplies more than two million households across the UK.