How we invest responsibly
Our approach includes the following four areas:
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Engagement
Taking money out of or excluding companies that don't meet certain criteria around environmental, social and governance (ESG) issues may seem simple. However, this would mean we're unable to take action to influence change. We believe in engaging with these companies to support them to improve their corporate behaviour and encourage change.
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Voting
We use our voting rights on a range of issues. This includes voting on matters such as how companies are run, their impact on climate change, board appointments, changes to a company’s structure, pay and compensation, and mergers and acquisitions.
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ESG integration
We expect all the asset managers who manage your employees' investments to consider environmental, social and governance factors in their investment decision-making process.
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Collaboration
We collaborate with policymakers, the companies we invest in, industry groups and other stakeholders on key issues such as climate change to support meaningful regulatory and industry change.
Responsible investment and your employees' investments – how we put our approach into practice
We work closely with the asset managers managing your employees' investments, including Royal London Asset Management, which manages most of our customers' investments. As a minimum, we ask all our asset managers to consider ESG factors in their investment decision-making.
Our RLMIS Responsible Investment and Stewardship Policy (PDF) and Voting Principles (PDF) cover how we hold ourselves and our external asset managers accountable to the standards set out in the Group-wide Royal London Responsible Investment and Stewardship Policy. Royal London Asset Management's Responsible Investment and Stewardship Statement (PDF) and Voting Guidelines (PDF) are part of our Group-wide policy.
Our Governed Range portfolios and lifestyle strategies, which include our workplace default options, incorporate our responsible investment approach.
For employees who want to align their investments with their values, we offer a range of nine sustainable funds. These invest in companies that contribute positively to the environment and society. With options spanning fixed income, mixed asset and equities, your employees can choose a fund or combination of funds based on how much risk they feel comfortable taking.
Remember that the value of all investments can go down as well as up, and your employees may get back less than they paid in.
Climate change as a key issue
In June 2021, we announced our commitment to achieve net zero across our investment portfolio by 2050 and to halve emissions from it by 2030. Our climate commitments are based on the expectation that governments and policymakers will deliver on their commitments to achieve the goals of the Paris Agreement and that the required actions don't go against our legal and regulatory obligations to our members, customers and clients.
Fossil fuels - like coal, oil and natural gas - release large amounts of greenhouse gases when produced and burned. You can learn more about our investment approach to fossil fuels in our Fossil Fuel Investments Position (PDF).