British fund manager Schroders has introduced an equity strategy that aims to meet the sustainable investment demands of UK Defined Contribution (DC) schemes. The Schroders ESG fund will integrate environmental, social and governance (ESG) analysis into a systematic investment approach, with an aim to outperform the MSCI All Country World Index (ACWI).

Schroders head of UK institutional DC Tim Horne said: “DC pensions are increasingly looking at how best to incorporate sustainability into their schemes in response to investor demand and regulatory change.

“However, until now, this has been a challenge for DC schemes as the charge cap means many actively-managed strategies are out of reach for most schemes.”

The new vehicle will exclude industries dealing with tobacco, weapons and gambling, while comprising less than half of the index’s carbon intensity.

Schroders global head of stewardship Jessica Ground said: “The evidence is increasingly clear that savers want to boost their exposure to sustainable investments.

“Our new fund aims to support investors on their retirement journey by delivering index-beating and sustainable returns thanks to the innovative SustainEx framework created by Schroders’ Sustainability team.”

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