Our responsible investment approach
The shift we’re seeing
Customers are also being influenced by growing concern for the planet, and the impact that business activities are having on the environment. With this in mind, we’re making a stronger commitment to including these factors in our investment decisions.
The shift we’re making
As the UK’s largest mutual insurance and pension provider, we’re committed to being a responsible investor.
This means we aim to generate good returns whilst also making a positive contribution to our society and environment. Good governance has always been important to us, but going forward, we’ll be more proactive in asking our asset managers to include financially material environmental, social and governance (ESG) risks and opportunities when they make investment decisions.
We believe it can help to manage risk, support informed investment decisions, and help to generate better long-term results for our customers. Remember prices can fall as well as rise meaning you may not get back the full amount of capital originally invested.
We’ve also asked our asset managers to help us fulfil our stewardship responsibilities by working with the companies we invest in to improve the way they’re run - for example, by voting our shares, meeting with company management, or pushing for higher industry standards.
Ultimately, we're committed to putting the three key Responsible Investment pillars into practice:
Stewardship and voting
Advocacy and engagement
ESG integration
At Royal London we are committed to be a Responsible Investor.
And that means looking at the bigger picture.
It’s about looking at Environmental, Social and Governance factors, or ‘ESG’ for short.
For example, we might look at a company’s position on environmental responsibility, cyber security, or boardroom diversity.
As part of this commitment, we’re asking all our asset managers to consider financially material ESG risks and opportunities when they make investment decisions.
And to be good stewards by voting and engaging with companies to improve the way they’re run.
We fully expect all asset managers who we choose to work with to be putting these principles into place.
To us, Responsible Investing isn’t about choosing values over value - it’s about managing risk, making better investment decisions, and generating better long-term results for our customers.
How we practice Responsible Investment
We believe our asset managers are best placed to understand the importance and impact of ESG factors across our investments in order to help improve customer outcomes.
Our role is to pick the best asset managers and set out our investment strategy. We believe deciding not only how we invest but who we choose to work with puts us in the best position to do what’s right for our customers.
Responsible selection
Before we appoint an asset manager, we’ll carry out a responsible investment assessment at the screening stage to make sure they meet the best practice standards we have in place.
Appointment
We’ll make sure all our Responsible Investment principles are known to all our asset managers, and we’ll only choose to work with the ones who are already working on putting these principles into practice
Monitoring and reporting
We’ll ask asset managers to provide regular updates and reports on their progress. If we find they’re not reaching the standards we expect, we may decide to stop working with them.
We have recently become signatories of the UN Principles for Responsible Investment (UN PRI), and by the end of 2020, we also aim to sign up to the UK Stewardship Code set out by the Financial Reporting Council.
Royal London Holding Statement - Shareholder Rights Directive II (SRD II)
We’re committed to being a responsible investor. Good stewardship has always been important to us, as is choosing the right asset managers to make investment decisions on our behalf. We’ve issued a Responsible Investment policy and we’re currently developing our engagement policy, which will be available on our website in due course; in the meantime, our primary asset manager Royal London Asset Management (RLAM) exercises their stewardship responsibilities by voting at company meetings, and through engaging with companies on environmental, social and governance (ESG) issues. Read more about RLAM’s approach to Responsible Investment.
What this means for you
Ultimately, responsible investing is not about choosing values over value, but how we can integrate both to deliver long-term investment returns. Remember prices can fall as well as rise meaning you may not get back the full amount of capital originally invested.
By combining the skills of our asset managers and considering the ESG impacts of all our investments, we aim to provide better customer outcomes whilst working towards making businesses, society and the environment stronger for the future.
We’ll provide updates on our responsible investment activity in our Annual Report, and we’ll update our website with news on an ongoing basis.