Royal London Asset Management (RLAM) today publishes its 2020 Stewardship Report, which highlights its stewardship and responsible investment activities in 2019.
Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management said:
“Given the major societal and economic changes we expect as a result of the coronavirus outbreak, we believe ESG factors will become even more relevant to long-term investors.
“In 2020, RLAM will continue to focus on engaging with companies on climate risk, governance and diversity but we have also identified financial and social inclusion, innovation and technology, and the circular economy as areas to engage and challenge companies on.
“In terms of governance and voting activity, we are anticipating a greater focus on diversity in 2020, with a stronger emphasis on ethnicity following the Parker review.”
The theme of financial and social inclusion is particularly important for Royal London as a mutual. We believe that companies succeed when everyone has an opportunity to participate and be a productive member of society.
There are clear benefits and challenges from technology advancing and jobs changing. The current coronavirus crisis is highlighting that technology can be a blessing – allowing us to effectively work remotely – and a curse – with complex issues such as privacy to tackle.
The circular economy concerns the need for companies to design products and processes for the future that don’t hurt our planet.
ENGAGEMENT AND ADVOCACY
In 2019 the responsible investment team at RLAM had a total of 260 company engagements with 175 companies. This represents an increase on the previous year and together with RLAM’s investment in additional staff, data and systems is proof of RLAM’s commitment to engaging with companies. The key topics of engagement were executive remuneration, climate transition risk and reputational risk.
Over 40% of RLAM’s engagements (45 out of 109) on pay were on executive pensions, resulting in commitments to reduce executive pension provisions, or at a minimum freeze them relative to salary, so they will slowly reduce over time. Some companies that we actively engaged with, such as Marshalls plc, a manufacturer of stone and concrete for landscaping, committed to raising the minimum pension level for the workforce following engagement with RLAM.
GOVERNANCE AND VOTING
The two themes that received most of RLAM’s attention were executive pay and diversity.
Out of the 15,665 votes we cast in 2019 on executive remuneration resolutions, 70% were for, 27% against and on the remaining we abstained or took no action. We identified 94 companies in the UK where we had concerns about diversity. We decided to vote against or abstain on the nomination committee chairman at 67% of these companies to signal our desire for companies to make more progress on diversity.
About Royal London Asset Management (RLAM):
Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.
RLAM manages £139 billion of assets and employs 113 investment professionals as at end July 2020. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.
For professional clients only, not suitable for retail investors.
Issued by Royal London Asset Management Limited, registered in England and Wales number 2244297; authorised and regulated by the Financial Conduct Authority. Registered Office: 55 Gracechurch Street, London, EC3V 0RL.
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