How Royal London uses proxy votes and its benefits for your employees

As a large investor, we use our voice as a shareholder to help your employees' investments work harder. Through Royal London Asset Management, we vote with the aim of benefitting your employees’ investments in their Royal London pension or Stocks and Shares ISA.

We use our influence to engage with policymakers and the companies we invest in, as well as when we collaborate with other organisations and stakeholders. As part of this engagement, we use our voting rights to aim to influence change.

Proxy voting in a changing world

Over the past decade, voting practices have evolved. 10 years ago, voting was often procedural – usually with an emphasis on compliance, minimal standards and trying to stay out of the spotlight. While governance mattered, it was typically restricted to board structure and pay.

Today, the world has moved on. Voting has shifted from an operational function to a real tool for accountability. It’s now a fundamental part of active management that is closely watched by companies, clients, the media and wider society.

In today’s world, environmental, social and governance (ESG) issues – including climate change, biodiversity loss, human rights and workforce practices – are no longer peripheral concerns. They sit squarely within the governance remit.

Why championing ESG issues matters

A large proportion of your employees’ investments are held as shares in companies, so how these companies perform can affect the value of their pensions and ISAs.

Companies can face financial risks from poorly managing ESG issues, such as impacts from and on the environment or failing to support staff. Meanwhile, a company considering environmental and other societal issues in its plans may be better placed in some cases to improve resilience, increase efficiency and market share, and deliver positive returns.

Ultimately, how companies care for the environment, treat people and run their business can affect how they perform over the long term.

This is why ESG issues are a key consideration in our voting decisions at companies your employees’ pensions and ISA portfolios are invested in. It’s part of being a customer-owned business – our focus is on outcomes for your employees, our members. If we believe ESG issues such as climate change or poor governance could negatively affect their financial outcomes, we use voting and engagement to try to influence companies to change.

We do this with the hope of driving growth in your employees’ investments and better supporting their financial future.

But that’s not all. Our voting, engagement and investment activities complement how we operate as a business so we can play our part in addressing ESG challenges that will affect the future your employees will live in.

We’re realistic when it comes to how much our engagement and investment decisions alone can positively shape the future. However, as a large investor, we believe that these actions can help us play our part in encouraging companies to improve their ESG behaviours.