Customer Story

While Nest has made great strides in defining its ESG priorities, gathering the data it needed to execute its strategy was challenging. The ESG data landscape is fragmented and disjointed, requiring significant effort to gather information from a wide range of sources. This process is not only resource-intensive but also complicated by the lack of integration between ESG data and mainstream investment risk metrics. As a result, fully integrating ESG considerations into investment processes, which is a core part of Nest’s objectives, can be difficult. 

To address these challenges, Nest launched a search for a data provider and partner who could support its key activities, including:

• Assessing and ensuring that its funds adhere to their responsible investing standards
• Providing a consistent set of metrics it could apply across different portfolios
• Monitoring fund manager performance on specific policies about values and ethics
• Support Nest in carrying out its own stewardship activities
• Fulfilling reporting requirements like TCFD and FRC Stewardship Code reports

 This is where Clarity AI came into play.

Here’s how Clarity AI became the essential partner Katharina needed to achieve all of Nest’s priorities while aiming to help ensure excellent returns for members.

Nest sets expectations of each manager about responsible investment and stewardship — they’re tailored to each individual manager, and vary depending on the market and asset class, which makes them more accurate but also more complicated. The investment team holds an internal quarterly fund manager monitoring meeting to discuss manager performance and review any potential breaches of ESG criteria and other mandates. For example, Nest assesses exposure to areas of potential risk across the portfolio, using data points like exposure to oil and gas, labor rights violations or biodiversity concerns. Clarity AI is helping Nest make these meetings significantly quicker and easier.

This fundamental part of Nest’s work is now more accurate and faster at the same time, giving them both efficiency and effectiveness gains. Across all the funds it manages, this time savings is significant.

Nest recently appointed Aladdin® as its investment risk platform and now uses their climate scenarios to inform its asset allocation process. With the large amount of ESG investment data available but siloed in different formats, processes, and platforms throughout the industry, Nest were looking to onboard a partner that would seamlessly integrate with the Aladdin® platform to create a consolidated platform for investment risk and sustainability analysis.

Data that was previously hard to find and use, scattered across platforms, is now easily analysed and accessed in one tool. Plus, this easy integration has opened even more future possibilities for using both Clarity AI and Aladdin® to further enhance Nest’s ESG work and evaluation.

Nest has transformed its approach to managing a large and complex investment strategy, enabling it to better achieve its ambitious sustainability goals. Clarity AI’s platform has empowered Nest to:

Looking ahead, Nest plans to develop an even more sophisticated risk management system to further refine its investment strategy and deliver on its commitments to sustainability and responsible investing. With Clarity AI as a partner, Katharina and her team are well-positioned to take Nest’s commitment to investing for a better world, and better returns, to the next level, even in a changing world.

From improving its process to monitor manager performance, to delivering on its responsible investment objectives, Nest’s continued success as a leader in sustainable investing is all but assured.