We invest responsibly for you
This can help us to:
- manage financial risks that could affect your pension and ISA savings
- grow your money over the long term
- play our part in positively shaping the future.
We invest responsibly in line with Our Purpose: 'Protecting today, investing in tomorrow. Together we are mutually responsible.'
What is responsible investment?
At Royal London, responsible investment means we consider environmental, social and governance (ESG) issues in the investment solutions we develop and where we actively use our influence to support progress.
We believe that doing this is in our customers' best interests to help manage financial risk and deliver value to them over the long term.
At Royal London, responsible investing isn't the same as sustainable investing. Sustainable investing is a strategy that intentionally invests in companies or assets that contribute towards positive environmental and/or social outcomes. It also typically avoids investment in a wider range of industries and companies. We offer a sustainable fund range for customers looking to take this approach.
Why is responsible investment important?
Responsible investment is important for several reasons.
- ESG issues can present both financial risks and opportunities, potentially affecting how your pension and ISA savings grow.
- How companies care for the environment, treat people and run their business can affect how they perform over the long term - and whether they deliver a financial loss or a gain to you.
- Investing responsibly, encouraging companies to better manage ESG challenges, and aiming to influence policymakers can help us play our part in moving fairly to a sustainable world.
Find out more in understanding the link between ESG issues and your investments.
What we do
As a large investor, we use a variety of approaches to aim to manage financial risks and uncover opportunities, adapt quickly to change and influence positive action. The investment approaches we choose to use will vary depending on where you're invested.
We also apply our group-wide policies and positions to our investments. These include our climate commitments, such as net zero goals, exclusions (what we avoid investing in) and approach to fossil fuels.
What we don't do
We don't immediately withdraw investment from a company if it fails to meet our ESG preferences. For example, if we have concerns about the credibility of a company's strategy to reduce greenhouse gas emissions, such as carbon dioxide.
Our starting point is to engage with the company so we can understand and influence how it operates. By doing that, we can prioritise your financial interests and aim to play our part in moving fairly to a sustainable world.
However if a company isn't making tangible progress - and this could have a negative impact on your pension and ISA savings - we'll take necessary action, which may include exclusion.
How we invest responsibly
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How you can invest responsibly with us
We embed responsible investment in our ready-made investment options at no extra cost to you.
You can also choose from our range of sustainable funds. These focus on investing in companies that contribute positively to the environment and society.
Remember that the value of all investments can go down as well as up, and you may get back less than you paid in.
Understanding the link between ESG issues and your investments
Investments, like those in your pension or stocks and shares ISA, are often in companies. So the success of these companies (how they perform financially) can affect the value of your investments.
Poor management of ESG issues - such as impacts from and on the environment, or failing to support staff welfare - can create financial risks for a company. On the flip side, in some cases, a company considering environmental and other societal issues in its plans may be better placed to improve resilience and efficiency, increase market share and deliver returns.
This is why we look at ESG issues when deciding where to invest your money, alongside other areas that can affect performance. And it's part of the reason we use our influence to encourage companies to improve their management of ESG issues.
Examples of ESG considerations
Environmental
The impact environmental challenges, like climate change and the transition to net zero (balancing the amount of greenhouse gases emitted into the atmosphere and the amount removed from it), could have on a company’s ability to operate.
For example, a company could be at financial risk if consumer demand moves to low‑carbon options or changes in weather patterns affect the availability of basic materials it uses to make products. On the other hand, by coming up with environmental solutions, a company could experience stronger growth.
Social
How a company treats its employees, suppliers and the communities in which it operates, and the resulting risks or positive impacts on its business. Human rights, health and safety, working conditions and equity (fairness) are key factors to consider.
Governance
How a company is run. Its measures to prevent fraud, bribery and corruption, how it approaches executive pay and the diversity (the range of people from different backgrounds, race and genders) of its board.