How investing in your future helps to sustainably support communities. 

Stuart Nicholson
Director of Loan Investments & Shareholder Assets
07 April 2021
3 min read

As a nation, we’ve become more conscious about how the choices that we make every day impact our planet and our society. Whether that’s swapping our plastic bags for reusable canvas ones, using the bike more often than jumping in the car, or supporting local shops and livelihoods instead of frequenting big chains. But are we as vigilant about the sustainable decisions we’re making when it comes to our money?

Whether you’ve heard the term ‘impact investing’ before or not, I expect that some of these investments will have touched your life in one form or another. Examples include huge infrastructure initiatives like The Thames Tideway Tunnel - the 25km super sewer under the Thames – and Hornsea One, the world’s largest offshore wind farm, to investment in STEM (Science, Technology, Engineering & Maths) educational facilities at top UK universities. While these are very different projects, they have all been supported by investments from the Scottish Widows annuity fund.

What is impact investing?

Impact investing means investing in change. It creates an investment model that’s a win-win for everyone; the British public benefits from billions of pounds of investment in important infrastructure, education and housing projects while our customers benefit from having a competitively priced and stable annuity income throughout their retirement.

How does an annuity work?

An annuity is a type of retirement income product that allows customers to exchange pension savings for a guaranteed, regular income. While the cost of an annuity can depend on various factors such as age, health conditions and lifestyle, it can provide piece of mind for annuity customers knowing that they have a guaranteed income for the rest of their lives rather than worrying about how to manage their own pension pot.

In a nutshell, our customers use their pension pot to buy an annuity from us and we guarantee them a regular income for the rest of their life, with no investment risk for the customer. 

However, there’s no ‘one-size-fits-all’ when it comes to finances and different products will suit different needs and lifestyles, so customers should be sure to seek advice before committing to a long-term retirement plan.

How are annuity funds invested? 

We invest part of the proceeds we receive from our annuity customers by making long-term loans to commercial clients like housing associations, universities and infrastructure funds. These loans make key projects possible, helping Britain to recover as well as supporting the transition to a more sustainable future.

The interest we receive on these loans helps us to price our annuities as competitively as possible for our retired customers. 


Since 2018 the Scottish Widows annuity fund has advanced

over £400 million 

to support green initiatives across the UK

How is our approach having an impact on the investments that Scottish Widows makes?

Typically when determining where to invest, we look to partner with businesses and on projects that fit with our aim of helping Britain recover sustainably, while providing a long-term source of income to meet our customer annuity payments. It’s beneficial for all parties.

In December Scottish Widows, part of Lloyds Banking Group, lent over £200 million for two major projects – one providing specialist homeless accommodation and the other investing in renewable energy.

Firstly, we lent £120 million to support the provision of high-quality accommodation for the homeless. The long-term funding has been provided to an investment company which supplies housing to specialist, registered homeless charities and housing associations. These organisations provide care, training, support and rehabilitation to the residents, many of whom come from vulnerable groups such as women fleeing domestic violence, ex-servicemen and women, prison leavers, people with mental health problems and those suffering from drug and alcohol abuse.

We also advanced £96m to one of the largest operators of small-scale, onshore wind turbine sites in the UK. The 17 year loan funds 185 onshore wind turbines spread over 132 locations across the UK – with capacity to power around 15,000 homes.  These turbines have a generation capacity of 28MW, located at sites from the Isle of Skye down to Cornwall.

Since 2018 the Scottish Widows annuity fund has advanced over £400m to support green initiatives across the UK. These include wind and solar renewable energy projects as well as the roll-out of smart meters to help people be more energy efficient in their own homes.


We lent

£120 million

to support the provision of high-quality accommodation for the homeless

Is impact investing the future? 

We are all becoming more and more aware that the decisions that we make have an impact, not just upon those around us, but across the UK and the wider world too.  As a result, impact investing is here to stay and Scottish Widows (and Lloyds Banking Group) will continue to play its part by funding initiatives that have a positive impact upon our society.

Where might we see impact investments in 2021?

It’s clear, now more than ever, that it’s incredibly important to have somewhere that you can call home.  Scottish Widows already has £3.5 billion invested with housing associations who offer people an affordable, long-term and secure housing option and we plan to continue investment in this sector during 2021, whilst looking for opportunities to fund further infrastructure projects, including renewable energy.




About the Author:

Stuart Nicholson

Director of Loan Investments & Shareholder Assets, Scottish Widows

Stuart joined Scottish Widows in 2014 to build capability for the annuity fund to invest in illiquid assets (loans to commercial clients).  He is now responsible for the Scottish Widows shareholder asset portfolio, including the annuity fund. Prior to this, Stuart held roles within the wider Lloyds Banking Group in debt restructuring and recovery and had previous roles in private equity, leveraged debt and corporate finance advisory.

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