What is responsible investing?

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We hear lots about responsible investing, as well as environmental, social and governance issues – but what exactly does it all mean?

At Royal London we’re committed to being a responsible investor, which means we look at the bigger picture when it comes to our investments.

What is responsible investing?

Put simply, it’s a type of investing that aims to generate good financial returns while also making a positive difference to our society and environment. This involves looking at environmental, social and governance factors, or ‘ESG’ for short.

What does ESG mean?

Environmental, social and governance are the three key areas that help investors measure the ethical and sustainability impacts of a company or a sector.

So, to put this into practice, when looking at the ‘environmental’ factor, investors would assess what damage a company is doing to the environment. For the ‘social’ factor they’d look at how well a company looks after people, and check that it isn’t exploiting anyone. And for ‘governance’ they’d see how well a company is run. Depending on the type of company, there could be lots of different things for investors to look at for each factor.

What is ESG?. This image is an infographic and has alternative text available if you are using a screen reader.

Environmental

  • Pollution
  • Carbon footprint
  • Energy use
  • Water consumption
  • Waste management
  • Recycling

Social

  • Employee wellbeing
  • Customer welfare
  • Supply chain management
  • Working conditions
  • Local communities
  • Slavery policy

Governance

  • Company pay
  • Executive bonuses
  • Shareholder engagement
  • Legal requirements
  • Tax strategy
  • Bribery and corruption

How does responsible investing work?

At Royal London, we’re asking all of our asset managers (the people who look after your money) to consider financially material ESG risks and opportunities when they make investment decisions. Plus, we ask them to be good stewards by voting and engaging with companies to improve the way they’re run.

Essentially, we’ll only ever choose to work with asset managers who are already putting these key principles into practice:

  • Stewardship and voting
  • Advocacy and engagement
  • Investment solutions
  • ESG integration

We think this approach can help to manage risk, support informed investment decisions, and help to generate better long-term results for our customers.*

How does it benefit you?

By using the skills of our asset managers and considering the ESG impacts of all our investments, we aim to not only provide better outcomes for you, but also have a positive impact on businesses, society and the environment to create a better future for us all.

Investing responsibly

Learn about our approach to responsible investing and the changes we’re making.

Find out more about Investing responsibly

Fighting climate change

Discover how we’re responding to climate change risks and opportunities.

Read our climate change commitments about Fighting climate change

*Remember, past performance is not a guide to the future. Prices can fall as well as rise meaning you may not get back the full amount of capital originally invested. Investment returns may fluctuate and are not guaranteed.

More on how we manage your money