Responsible investment

At Royal London Asset Management, responsible investment is a major part of our history and a vital part of our future.

As part of a mutual group, responsible investment is a natural fit and key element in delivering our Group purpose – Protecting today, investing in tomorrow. Together we are mutually responsible. Benefiting from the stability of being part of the UK's largest life, pensions and investment mutual we can take a longer-term view, ensuring we are well placed to invest responsibly and champion positive, enduring change.

We believe we have a strong track record in this area. We were among the first signatories of the UN-backed Principles for Responsible Investment, launched our Sustainable fund range more than two decades ago, and have an established track record in voting and engagement – using our voice and voting rights to act as powerful stewards of our clients’ investments.

For our investment teams, being a responsible investor means integrating the environmental, social and governance factors into our active investment decisions.  We tailor this approach to consider the nuances of the assets we manage because we think that this is in the best interests of our clients to improve standards, reduce risk and enhance returns in their investment portfolios. Responsible investment and stewardship can mean different things to different investors. That’s why we emphasise transparency – talking with our clients to ensure we understand their priorities and they know what our approach is delivering.

We believe that effective responsible investment helps society and produces better results for our investors. We recognise the opportunities in this area: that’s why we will continue to evolve our approach, investing in our people and infrastructure as we play our part in moving fairly to a sustainable world. It’s asset management excellence with a longer-term perspective.

Responsible investing. Meeting the challenge, together

Royal London Asset Management is committed to being a responsible investor. This means being a good steward of our clients’ assets and promoting responsible investment and good governance across asset classes.

Alongside this, we also believe that considering environmental, social and governance (ESG) issues in the investment process can help us deliver better returns for our customers and clients.

At Royal London Asset Management, we have embraced responsible investing for many years and continue to expand our offering in line with the evolving world of ESG best practice – extending our ESG integration practices and integrating these across our asset classes as appropriate.

As our ESG practice has evolved, we’ve invested in our Responsible Investment team, and our research and insight in this area – providing the foundation for future growth in this evolving area.

Principles for Responsible Investment

The Principles for Responsible Investment (PRI) score outlines how signatories’ implementation of responsible investment compares year-on-year, across asset classes, and with peers at the local and global level, by providing a confidential report. Royal London Asset Management has been a signatory of the PRI since 2008 and, like many others, have chosen to publish our latest report and results. These latest scores, published in December 2023 are reflective of the 2022 reporting period.

Scoring is based on star ratings. For each module, responders are given a star rating out of five, which is derived from underlying indicators scores across all modules. Our latest scores are in the table below. 

Source: Principles for Responsible Investment, Royal London Asset Management 2023 scorecard 15 December 2023.

* Our customised peer group is European Investment Managers with AUM size €50bn -€249.99bn

"We have been a signatory of the PRI for over 10 years, and we recognise the importance of the survey results to our clients. We are pleased that we improved our scores on passive and quantitative equity to five stars, following our move to ESG tilts in 2021. It’s also great to see we maintained our five-star rating for real estate and achieved a respectable four stars across all other categories." - Ashley Hamilton Claxton, Head of Responsible Investment.

Governance and voting

We strongly believe in the benefits of voting ‘as a house,’ and by doing so we send a clear and consistent message to companies about our expectations and concerns. While we will often start engaging with companies privately about these concerns, we will also work with other investors or speak publicly to the press where we haven’t seen progress.

Our full historic voting records can be found in our voting database, and our approach to a number of market-specific issues are detailed in our Voting Guidelines. Contact us for further information.

View our voting database

Engagement and advocacy

Building meaningful relationships is core to our stewardship responsibilities and our commitment to being a responsible investor means that we regularly engage with companies held within our funds. These activities give us an opportunity to positively influence behaviours and practices, and reduce the negative ESG impacts of the companies in which we invest.

Whilst we undertake proactive and reactive engagement activities, in order to prioritise key areas for focus we undertake a review of key engagement themes every two years. For 2024-2026 the below six themes are our key engagement focus areas.

ESG in investment solutions

We believe unmanaged ESG risk can diminish the value of our clients’ assets. Therefore, we embed ESG issues into our investment and management processes.

Our team of responsible investment professionals work with investment managers and analysts across all asset classes to help identify material risks and issues in the companies and sectors that we invest, for example the impact of wider themes such as climate change.

To help tailor our approach, the Responsible Investment Team conducts quarterly ESG reviews with fund managers to discuss the most relevant and material ESG risks and opportunities. In addition to this formal process, the Responsible Investment Team is in constant contact with the investment teams and this helps to ensure that ESG risks and opportunities are continuously being embedded into investment decision making.

Beyond ESG integration we offer a range of both pooled and segregated solutions to address varying levels of ESG appetite of our clients, including our ethical and sustainable funds.

Climate change is the challenge that will define this generation. Temperatures are on track to rise by more than 3 degrees by 2100 if immediate action is not taken to curb global carbon emissions.

Royal London Asset Management’s climate change strategy is rooted in a deep commitment to stewardship and responsible investment.  

We are committed to playing our part in achieving net zero through the following actions:

• Reducing the emissions of our investments by 50% by 2030 (tCO2e/$m invested) as part of the transition to net zero by 2050*​. ​
• Engaging with policymakers, the companies we invest in, our peers and other stakeholders to play our part in enabling the fair transition to a sustainable world. ​
• Developing investment solutions that enable clients to invest in the low-carbon transition. ​

Our commitment is made at the firm-level and we will report periodically and transparently on the progress we are making. This commitment does not apply to all Royal London Asset Management funds and strategies because each will have different investment objectives. Please check your prospectus for details on specific fund-level objectives.​

Our intention is to decarbonise Royal London Asset Management’s in-scope assets under management in line with the real economy. We will also work closely with our segregated clients towards this goal where they have made explicit public commitments to net zero. Royal London Asset Management’s efforts are focused on supporting the decarbonisation of the companies we invest in through engagement (and not decarbonising our portfolio regardless of the real economy). The commitment is based on the expectation that governments and policymakers will deliver on commitments to achieve the goals of the Paris Agreement. It also assumes this action does not contravene Royal London Asset Management’s fiduciary duty to external investors. ​