By being a force for good, and putting environmental, social and governance (ESG) issues at the heart of our investment decisions, we aim to improve the impact of companies and individuals on the wider world.

As the UK’s largest mutual insurance and pension provider, we’re committed to acting and investing responsibly. We choose the asset managers that look after your investments in a responsible way and ask them to consider ESG issues when they make decisions. We also act on your behalf to influence and challenge the companies you own shares in, on issues such as CO2 emissions, modern slavery policies and executive pay.

Because we’re a leading investor, we can use our influence to make a real difference and push for positive change.

Together for good

Helping you invest responsibly and build your financial resilience. We are taking action to help build a future worth living in.

More on what we stand for

The big shift

Climate change is at the top of a big list of global problems, which also includes things like threats to cyber security and public health.

These problems won’t go away quickly on their own and they affect some of the companies that your pension is invested in.

How companies respond to them matters for investment returns and ultimately – the growth of your pension pot, as well as for people and planet.

That’s why we ask our asset managers to consider how companies are responding to big global problems in their investment decisions and challenge them where we think they need to do more.

Read more about our climate change commitments

The shift we're making

As the UK’s largest mutual insurance and pension provider, we’re committed to being a responsible investor.

This means we aim to generate good returns whilst also making a positive contribution to our society and environment. We do this by asking all the asset managers we work with to include financially material environmental, social and governance (ESG) risks and opportunities when they make investment decisions.

We believe it can help to manage risk, support informed investment decisions, and help to generate better long-term results for our customers. Remember prices can fall as well as rise meaning you may not get back the full amount of capital originally invested.

We've also asked our asset managers to engage with the companies they invest in on our behalf to improve the way they're run - for example, by voting at shareholder meetings, meeting with company management, or pushing for higher industry standards.

Ultimately, we're committed to putting the three key Responsible Investment pillars into practice:

Ribbon representing stewardhsip and governance

Stewardship and voting

Megaphone representing advocacy and engagement

Advocacy and engagement

Chain link representing ESG integration

ESG integration

At Royal London we are committed to be a Responsible Investor.

And that means looking at the bigger picture.

It’s about looking at Environmental, Social and Governance factors, or ‘ESG’ for short.

For example, we might look at a company’s position on environmental responsibility, cyber security, or boardroom diversity.

As part of this commitment, we’re asking all our asset managers to consider financially material ESG risks and opportunities when they make investment decisions.

And to be good stewards by voting and engaging with companies to improve the way they’re run.

We fully expect all asset managers who we choose to work with to be putting these principles into place.

To us, Responsible Investing isn’t about choosing values over value - it’s about managing risk, making better investment decisions, and generating better long-term results for our customers.

How we practice Responsible Investment

We believe our asset managers are best placed to understand the importance and impact of ESG factors across our investments in order to help improve customer outcomes.

Our role is to pick the asset managers we believe are best aligned with our investment principles. We believe deciding not only how we invest but who we choose to work with puts us in the best position to do what’s right for our customers.

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Responsible selection

Before we appoint an asset manager, we’ll carry out a responsible investment assessment at the screening stage to make sure they meet the best practice standards we have in place.

Workforce

Appointment

We’ll make sure all our Responsible Investment principles are known to all our asset managers, and we’ll only choose to work with the ones who are already working on putting these principles into practice.

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Monitoring and reporting

We’ll ask asset managers to provide regular updates and reports on their progress. If we find they’re not reaching the standards we expect, we may decide to stop working with them.

We have recently become signatories of the UN Principles for Responsible Investment (UN PRI).

Shareholder Rights Directive II (SRD II)

We invest £108bn* on behalf of our customers, of which around a third is invested in the shares of listed companies (equity investments).  The proportion of equity held in each investment strategy depends on the product. Our with profits products provides additional guarantees and smoothing, more detail on these products and their investment strategy can be found in the Principles and Practices of Financial Management.

We’re committed to being a responsible investor. This means that good stewardship is hugely important to us, as is choosing the right asset managers to make investment decisions on our behalf. You can find out more in our Responsible Investment policy and our Stewardship and Engagement policy.We work with our primary asset manager Royal London Asset Management (RLAM) to exercise our stewardship responsibilities. Read more about RLAM’s approach to Responsible Investment.

*as at 31 Dec 2020

What this means for you

Ultimately, responsible investing is not about choosing values over value, but how we can integrate both to deliver long-term investment returns. Remember prices can fall as well as rise meaning you may not get back the full amount of capital originally invested.

By combining the skills of our asset managers and considering the ESG impacts of all our investments, we aim to provide better customer outcomes whilst working towards making businesses, society and the environment stronger for the future.

We’ll provide updates on our responsible investment activity in our Annual Report, and we’ll update our website with news on an ongoing basis.

Frequently asked questions

ESG stands for Environmental, Social and Governance, which are three key factors that help investors measure the ethical and sustainability impact of a business or sector.

When looking at the first factor for example, an investor would examine what damage a company is doing to the environment. Is it causing pollution? If it’s a chemical company, does it have a history of leaks or spills? And does it clean up after itself? If it’s an oil or gas company, is it extracting as cleanly as possible? And what are its carbon capture plans or energy transition plans? How is it planning to change in future years? 

The social element involves finding out if a company is looking after people and not exploiting anyone. Does the company care for its employees, its suppliers, customers and the communities that it is involved with? For companies with employees and suppliers in developing countries, where employment law can be less formal, this is particularly important.

Governance is about how well companies are run. Do they follow all the legal and accounting requirements? Are they carrying out thorough audits, and do they have all the necessary checks and balances in place? What’s their attitude to company pay and executive bonuses? Do they always put their shareholders’ interests first? Are they as open with shareholders as possible?   

An investor who is ESG aware will want to know that these credentials are strong before investing.

We’re a long-term investor and we recognise the long-term challenges that climate change can have on our investments, business, our customers, and of course, the planet.

We know climate change is the challenge that will define our generation and we need to take action to carb global carbon emissions. You can find out more about how we're committed to tackling climate change.

Backed by the United Nations, the PRI are six principles that investors should follow if they want to create a more sustainable global financial system:

  1. We will incorporate ESG issues into investment analysis and decision-making processes.
  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  4. We will promote acceptance and implementation of the Principles within the investment industry.
  5. We will work together to enhance our effectiveness in implementing the Principles.
  6. We will each report on our activities and progress towards implementing the Principles.

Royal London Asset Management (RLAM) signed up to the UN’s PRI in 2008, and we became signatories in January 2020.

The UK Stewardship Code 2020 is a substantial revision of the 2012 edition, and came into effect 1st January 2020. The code aims to improve the way investors and companies communicate and work together, setting out principles of good practice that the Financial Reporting Council (FRC) believes investors should aim for when engaging with companies.

No, but we are supportive of the code. RLAM is currently a signatory, and we aim to become a signatory too.

We exclude cluster munitions, anti-personnel landmines, and biological and chemical weapons based on guidance from the following international conventions and treaties:

  • The Biological Weapons Convention 1975, prohibits the development, production and stockpiling of bacteriological (biological) and toxin weapons
  • Anti-Personnel Mines Treaty 1997, also known as the Ottawa Convention, prohibits the use, stockpiling, production and transfer of anti-personnel mines
  • The Chemical Weapons Convention 1997, prohibits the development, production, stockpiling and use of chemical weapons
  • The Convention on Cluster Munitions 2008, prohibits the use, production, transfer and stockpiling of cluster munitions.

No fund will knowingly invest in corporate equity and/or debt involved in the manufacture and sale of cluster munitions, anti-personnel landmines, or biological and chemical weapons.

Our asset managers are required to disclose their voting policy and record to us, and we’ll use this information to make sure they’re keeping to our responsible investment policy.

We’ll include updates on our responsible investment activities in our annual report, which is presented to our Board, members and customers. Where possible, we’ll also disclose the voting records of our asset managers on our website.

ESG stands for Environmental, Social and Governance, which are three key factors that help investors measure the ethical and sustainability impact of a business or sector.

When looking at the first factor for example, an investor would examine what damage a company is doing to the environment. Is it causing pollution? If it’s a chemical company, does it have a history of leaks or spills? And does it clean up after itself? If it’s an oil or gas company, is it extracting as cleanly as possible? And what are its carbon capture plans or energy transition plans? How is it planning to change in future years? 

The social element involves finding out if a company is looking after people and not exploiting anyone. Does the company care for its employees, its suppliers, customers and the communities that it is involved with? For companies with employees and suppliers in developing countries, where employment law can be less formal, this is particularly important.

Governance is about how well companies are run. Do they follow all the legal and accounting requirements? Are they carrying out thorough audits, and do they have all the necessary checks and balances in place? What’s their attitude to company pay and executive bonuses? Do they always put their shareholders’ interests first? Are they as open with shareholders as possible?   

An investor who is ESG aware will want to know that these credentials are strong before investing.

We’re a long-term investor and we recognise the long-term challenges that climate change can have on our investments, business, our customers, and of course, the planet.

We know climate change is the challenge that will define our generation and we need to take action to carb global carbon emissions. You can find out more about how we're committed to tackling climate change.

Backed by the United Nations, the PRI are six principles that investors should follow if they want to create a more sustainable global financial system:

  1. We will incorporate ESG issues into investment analysis and decision-making processes.
  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  4. We will promote acceptance and implementation of the Principles within the investment industry.
  5. We will work together to enhance our effectiveness in implementing the Principles.
  6. We will each report on our activities and progress towards implementing the Principles.

Royal London Asset Management (RLAM) signed up to the UN’s PRI in 2008, and we became signatories in January 2020.

The UK Stewardship Code 2020 is a substantial revision of the 2012 edition, and came into effect 1st January 2020. The code aims to improve the way investors and companies communicate and work together, setting out principles of good practice that the Financial Reporting Council (FRC) believes investors should aim for when engaging with companies.

No, but we are supportive of the code. RLAM is currently a signatory, and we aim to become a signatory too.

We exclude cluster munitions, anti-personnel landmines, and biological and chemical weapons based on guidance from the following international conventions and treaties:

  • The Biological Weapons Convention 1975, prohibits the development, production and stockpiling of bacteriological (biological) and toxin weapons
  • Anti-Personnel Mines Treaty 1997, also known as the Ottawa Convention, prohibits the use, stockpiling, production and transfer of anti-personnel mines
  • The Chemical Weapons Convention 1997, prohibits the development, production, stockpiling and use of chemical weapons
  • The Convention on Cluster Munitions 2008, prohibits the use, production, transfer and stockpiling of cluster munitions.

No fund will knowingly invest in corporate equity and/or debt involved in the manufacture and sale of cluster munitions, anti-personnel landmines, or biological and chemical weapons.

Our asset managers are required to disclose their voting policy and record to us, and we’ll use this information to make sure they’re keeping to our responsible investment policy.

We’ll include updates on our responsible investment activities in our annual report, which is presented to our Board, members and customers. Where possible, we’ll also disclose the voting records of our asset managers on our website.

Collaboration in action

RLAM’s responsible investment team will work with other shareholders and organisations to help create better outcomes for you.

Find out more about Collaboration in action

Meet RLAM

Chief Investment Officer Piers Hillier explains how Royal London Asset Management (RLAM) approaches responsible investment.

Find more about RLAM about Meet RLAM

Case studies

Discover how RLAM’s responsible investment team have engaged with companies to influence and create change.

Read our case studies about Case studies