As a business we’re on a journey to net zero by 2050 and we have started taking actions to achieve this. While we currently invest in high emitting companies and sectors, we have developed a climate action plan to transition to net zero across our business. We believe we can help our customers reduce their exposure to climate related risk and help them take advantage of the opportunities presented by the net zero transition. Full details can be found in our Net Zero Transition Plan.

Starting in May 2026 and over the next four months, a range of passive and enhanced index funds will transition to climate aligned indices. This is driven by our belief that this approach delivers the best long-term outcomes for customers. These indices are designed to help manage climate-related risk through alignment with the goals of the Paris Agreement. This is achieved using tilts which seek to increase exposure to companies believed to be aligned to the transition, and those investing in the transition through climate solutions.

A number of funds have already transitioned to climate aligned indices as part of earlier Sustainability Disclosure Requirements (SDR) related work, including all equity and corporate bond funds underlying our key default solutions, including Sustainable Multi Asset (SMA), and this next phase builds on that progress. The indices follow science‑based decarbonisation pathways, including an expected 7% annual reduction in carbon intensity, while seeking broadly similar risk and return characteristics to standard market‑capitalisation benchmarks.

We apply a robust screening process to exclude companies that may present material sustainability-related financial risks. These exclusions are based on our responsible investment policy and reflect our commitment to aligning with sustainability objectives. We exclude companies involved in controversial weapons, tobacco production1, tobacco distribution, retail, and supply2, thermal coal mining and energy production3, arctic drilling3, oil sands extraction3, breaches of the United Nations Global Compact (UNGC), companies with lowest ESG core rating4, and those with severe ESG controversies5.

Looking ahead, this approach will apply to all future internally mandated passive and enhanced index fund launches, becoming our default approach. This reflects our commitment to prioritising long‑term financial outcomes while managing sustainability risks, in line with UK pension scheme requirements.

1 Companies deriving more than 1% of revenue from this activity

2 Companies deriving more than 25% of revenue

3 Companies deriving more than 5% of revenue

4 Based on external ESG assessments

5 As identified by third party data providers