ESG integration and investments

We know that people care about making more responsible choices, which is why environmental, social and governance (ESG) factors are included in the investment decisions our asset managers make.

Issues such as corporate governance (the way a company is run), human rights and climate change are more important than ever, and we believe these and other factors should be taken into account when deciding where to invest a customer’s money.

As part of our commitment to being a responsible investor, we ask our asset managers to integrate ESG factors across all investment choices, not just a select few.

We define ESG integration as the explicit inclusion of ESG factors in the decision-making process. This means that our asset managers should both understand and be able to explain the impact of these factors on the future performance of our investments.

Why is this important?

We believe that understanding the impact E, S and G factors may have on investments can help our asset managers make better investment decisions. In turn, this could mean better outcomes for your employees.

Integrating ESG factors not only helps our asset managers with the decisions they make, it also helps them build better relationships with the companies they invest in on behalf of your employees. If they have a deeper understanding of how companies are run, as well as how they make choices, our asset managers can highlight any areas for improvement and engage with them to influence this positive change.

ESG integration

Do workplace pension scheme default options benefit from ESG?

Yes. We're committed to having ESG factors integrated across all our investment solutions, not just a specialist few.

Our main asset manager partner is Royal London Asset Management. It has a specialist in-house team dedicated to responsible investment and ESG. This team helps support the investment teams in identifying ESG risks and opportunities across asset classes.

Royal London Asset Management uses a mix of internal and external ESG research to inform its investment decisions. By overlaying third-party research with its bespoke in-house expertise, it can evaluate and monitor the main ESG risks relevant to a specific asset class or fund.