How we integrate ESG into 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 we 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 across all investment choices, not just a select few.

We define ‘ESG Integration’ as the explicit inclusion of ESG in the decision-making process, which means they should understand how these factors could impact the future performance of our investments and be able to explain it.

Why is this important?

We believe that by understanding how E, S and G factors may impact investments, we can make better choices when it comes to investing, which could mean better outcomes for your employees.

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

ESG integration

Do default workplace pension schemes benefit from ESG?

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

To support their investment teams, RLAM has an in-house team of professionals dedicated to responsible investing and ESG subject matter expertise. This team helps support fund managers and analysts to embed ESG risks and opportunities across equity, fixed income and property investment processes.

RLAM use a mix of internal and external ESG research to inform our investment decisions. By overlaying third-party research with our bespoke in-house expertise, they can evaluate and monitor principal adverse ESG risks relevant to a specific asset class or fund.

Much of their in-house research activity has been centred on providing the means to empower and enable fund management teams to integrate ESG into their processes.

Over the past year, RLAM has developed their own bespoke ESG Dashboard, which serves as a central repository for housing ESG research, details on engagements, proxy voting and specific material ESG risks at the issuer level, as well as entity scores.