09 August 2021

Royal London says, “This is not the time to be passive” as it embeds responsible investment in pension funds

5 min read

Meera Khanna, Senior PR Manager
Meera Khanna

Senior PR Manager

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Royal London is further embedding responsible investment across its propositions through the introduction of ‘tilts’ to its £23bn2 passive equity funds - including in its flagship ‘Governed Range’.

As a result, the carbon intensity of the equity investment in the ‘Governed Range’, which has around 1.25m customers’ pensions invested in it, is expected to reduce by more than 10%3. This further strengthens Royal London’s approach to responsible investment and is part of its commitment to protecting standards of living for this and future generations, at no extra charge to customers.

The ‘tilted’ equity funds will increase holdings of companies with good Environmental, Social and Corporate Governance (ESG) practices and reduce holdings in companies with poorer practices. These adjustments will be implemented to improve the ESG profile of the funds, without significantly impacting risk or returns.

Julie Scott, Royal London’s Chief Commercial Officer, said:

“This is not the time to be passive on ESG. The introduction of these ‘tilts’ to our pension range is part of investing our customers’ money responsibly to make a positive difference to the planet. We will also continue to engage with companies to promote positive change.

“We are committed to making investing responsibly easy. That’s why we are making this enhancement to our default pension fund range, with no extra charge to our customers.”

In June, Royal London outlined its climate commitments to:

  • Achieve Net Zero across its investment portfolio by 2050⁴.
  • Reduce its carbon equivalent emissions from the investment portfolio by 50% by 2030, while also developing climate solutions that enable customers to invest in the low carbon transition.
  • Achieve Net Zero direct operational emissions by 20305.

For further information please contact:

Meera Khanna, Senior PR Manager

Notes to Editors

  1. More information on the change can be found here: https://www.royallondon.com/pensions/investment-options/the-power-of-your-pension/
  2. The total amount of all equity funds managed by Royal London Asset Management (RLAM) on behalf of the Royal London Mutual Insurance Society (RLMIS) that are being “tilted” to achieve a reduced carbon intensity is £23bn, as at 28 July 2021.  This includes equity investments underlying the Governed Range and other RLMIS funds.
  3. The main equity fund used in the governed range, RLP Global Managed, constituted 48% of all Governed Range assets, as at 30 June 2021.
  4. The term Net Zero means achieving a balance between the amount of greenhouse gases emitted into the atmosphere and the amount removed from it. The commitment is based on the expectation that governments and policy makers will deliver on commitments to achieve the 1.5°C temperature goal of the Paris Agreement. It also assumes this action does not contravene Royal London’s fiduciary duty to external investors. The commitment is baselined on the year 2020. It includes assets that are controlled by the Royal London Mutual Insurance Society Limited and are managed on its behalf by Royal London Asset Management Limited (RLAM). This includes the regulated investment funds managed by RLAM. It excludes segregated mandates managed by RLAM on behalf of its external clients.
  5. Net Zero direct operational emissions, with only residual offsetting. The commitment is baselined on the year 2019, as carbon emissions were significantly reduced by the impacts of Covid-19 in 2020.
     

About Royal London

Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £153 billion, 8.8 million policies in force and 4,075 employees. Figures quoted are as at 30 June 2021.