Visual representations of DC Forum 2025 event

Visual representations of DC Forum 2025 event

Defined contribution (DC) investors affiliated with the Net Zero Asset Manager (NZAM) Alliance are taking proactive steps to address climate change and drive the UK's transition towards a net-zero emissions economy. The third DC Forum, held at Stationer's Hall near London's St Paul's Cathedral, focused on discussions related to defined contribution investors and their strategies for tackling hard-to-abate sectors.

The forum provided a platform for discussing challenges facing the NZAM Alliance with DC asset owners and their managers. Key themes discussed included moving beyond 2030 targets, tackling hard-to-abate sectors, evolving thinking around index investing and net zero, and opportunities in green venture capital.

The UK's DC market has experienced significant growth since the introduction of automatic enrolment, and the growth rate of DC master trusts is projected to be substantial, reaching over £460bn by 2029. This growth could potentially influence the country's move towards net zero emissions.

One of the main topics of discussion at the forum was the evolution of thinking around index investing and net zero. DC investors are shifting towards climate-aligned index strategies that integrate ESG and net-zero criteria. Using common frameworks from NZAM and related alliances, they seek to reduce emissions exposure in passive portfolios while maintaining diversification and risk management.

In addressing hard-to-abate sectors, DC investors are engaging with high-emitting clients and sectors such as heavy industry and fossil fuels by incorporating rigorous transition plans and methodologies that focus on emissions reduction. This includes setting robust targets and policies covering deforestation, fossil fuels, and more, guided by standards like the Science Based Targets initiative’s Financial Institutions Net-Zero Standard.

Another topic of discussion was the opportunities in green venture capital. In evolving their portfolios, DC investors increasingly allocate capital towards green venture funds targeting climate solutions and innovations that address energy transition and sustainability challenges. This venture capital activity complements their traditional indexed and active strategies, aiming to mobilize private capital toward systemic change consistent with net-zero pathways.

All these efforts leverage collaboration within alliances to lower the cost and complexity of developing and implementing net-zero strategies. The alliances provide shared research, sector guidance, and progress reporting tools, fostering peer learning and standardization in transition planning.

In summary, DC investors in the NZAM Alliance are systematically evolving their investment strategies through science-based frameworks and collaborative alliances to manage exposure to hard-to-abate sectors, innovate in climate-aligned index investing, and increase green venture capital commitments as part of their credible path to net zero. The growth of the UK's DC market could have implications for the country's transition to a low-carbon economy, with DC master trusts potentially becoming a significant player in the UK's transition to net zero.

[1] Net Zero Asset Manager Alliance (NZAM). (2021). [NZAM Alliance: Climate Transition Action]. Retrieved from https://www.netzeroassetmanagers.org/wp-content/uploads/2021/07/NZAM-Climate-Transition-Action-Report-2021.pdf

[2] Net Zero Asset Manager Alliance (NZAM). (2021). [NZAM Alliance: Climate Transition Action - Q3 Update]. Retrieved from https://www.netzeroassetmanagers.org/wp-content/uploads/2021/10/NZAM-Climate-Transition-Action-Q3-Update.pdf

[3] The Pensions Regulator. (2020). [Master Trust Assessment Process: Factsheet]. Retrieved from https://www.thepensionsregulator.gov.uk/docs/master-trust-assessment-process-factsheet.pdf

[4] The Pensions Regulator. (2018). [Automatic enrolment: A guide for employers]. Retrieved from https://www.thepensionsregulator.gov.uk/en/employers/automatic-enrolment/what-is-automatic-enrolment

[5] Science Based Targets initiative (SBTi). (2021). [Financial Institutions Net-Zero Standard]. Retrieved from https://sciencebasedtargets.org/initiatives/science-based-targets-for-financial-sector/financial-institutions-net-zero-standard

1. In line with their net-zero commitments, DC investors affiliated with the Net Zero Asset Manager Alliance are exploring innovative strategies in environmental science, such as climate-aligned index strategies that integrate ESG and net-zero criteria.
2. To further drive the UK's transition towards a net-zero emissions economy, DC investors are actively engaging in finance activities, such as allocating capital towards green venture funds addressing climate solutions and innovations.

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