Responsible investment team podcast: engaging for a better environment

Katie Eagles from our investment team talks to Ashley Hamilton Claxton, Head of responsible investment at Royal London Asset Management.

In this podcast you'll find out more about how the responsible investment team has engaged with Carnival - a cruise line company - to encourage environmental improvements, the action taken and the outcome for our customers.

Katie Eagles:

Hi, I’m Katie Eagles from the investment team at Royal London and welcome to the second podcast in our series focusing on responsible investment. I’m joined again by Ashley Hamilton Claxton who heads up the responsible investment team at Royal London Asset Management, and Royal London Asset Management look after more than 90 per cent of our customers’ pension investments.

Ashley- last time we spoke about how your team collaborates with companies on behalf of our customers to help influence positive change in society. Can you give us an example of where you’ve pushed for environmental improvements?

Ashley Hamilton Claxton:

One example that we've done recently over the last sort of 12 months was looking at Carnival. So, Carnival Cruise Lines which everyone will be aware of. So, this is a company that is a UK listed company. Some of our investments are in this company through some of our pension products for example. And what we identified with the company were a few concerns. We'd had a long history of raising concerns about corporate governance. The CEO is based in the US and has a US style pay and the board structure also has quite a US style board structure. So, we've been talking to the company about our governance concerns for a number of years.

And then more recently, for the shipping industry new regulations have been coming into play to regulate carbon emissions coming out of ships. So I don't know if you've ever been on a cruise ship but if you look up at the stack at the top of the cruise ship, you see quite black smoke coming out the top of the ship because they're burning of course fossil fuels to power the ship.

So, some new regulations were coming in place to regulate the emissions coming out of those smokestacks and we wanted to talk to Carnival about what it was doing to prepare for those. And out of that discussion with the business, what we found is the company felt quite unprepared, or where they were prepared they were just meeting the very minimal regulatory standards which meant they were putting technology in place that probably wasn't actually going to have a lot of shelf life - so it might become aged quite quickly. So, we felt that the company wasn't spending shareholders money in a way that would give us a real long-term sense that they were taking these environmental issues seriously.

And so what we did was, we fed that information back into our investment managers and raised a few concerns about ongoing governance issues and about these environmental regulations and how the company was responding. And as a result one of our fund managers in particular who had a holding in Carnival decided to sell down that holding - not completely for ESG reasons, because we can very rarely say that an environmental issue or a social issue is 100 percent driving our investment decision because of course the managers need to think about the financial consequences of that.

They can't think about environmental in isolation. So that was it that was quite a good example of where we considered that and made an investment decision.

Katie Eagles:

That’s a great example- thank you Ashley.

And thank you for listening. If you’re interested in finding out more about our approach to responsible investment, then please visit our website.

To find out more, visit our responsible investment section.

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