- Signatory type: Asset owner
- HQ: London, UK
- Region of operation: UK
- AUM: c.£304bn
- Asset classes: Equities, fixed income, property, private markets (private equity, debt, infrastructure, etc.)
When did you start looking at responsible investment?
We started our in-house responsible investment journey in 2019, when we created a position dedicated to responsible investment. Prior to this, we adopted the responsible investment approach of our asset management partners, who factored ESG considerations into their investment decision-making process.
Why did you start exploring responsible investment?
As the UK’s largest long-term savings and retirement business, we believe we have a pivotal role to play in creating a more secure and sustainable future for our customers and stakeholders. Pensions and savings needs are changing. People are living longer and the balance between economic progress and our wider environment is increasingly being challenged.
What were the initial steps you took to get started in responsible investment? Which stakeholders, internal and external, were involved? What additional steps have followed as your approach has matured?
Having created a dedicated role, we subsequently developed this into a nine-person (and growing) team, to oversee our responsible investment activities within asset management and develop our thinking. This was supported by the formation of a group-wide sustainability team and a board sustainability committee to oversee our wider sustainability strategy and commitments.
We also reached out to external consultants to ensure we were embedding best practice throughout the organisation and to challenge us on our thinking.
At what point did you decide to sign the Principles for Responsible Investment, and what were the key motivations for doing so? In what ways have PRI support, resources or signatory status been useful along the way?
We signed up to the Principles for Responsible Investment in December 2020. As one of the largest asset owners in the UK, we are able to influence a whole eco-system, so becoming a signatory was important to showcase our commitment and what we expect from our partners.
The PRI has offered us a baseline for what best practice looks like. Reporting to the PRI on our activities as an asset owner encouraged us to look at our practices and to challenge ourselves to set new goals that help us to go further.
What challenges (foreseen and unforeseen) did you encounter getting started in responsible investment?
While responsible investment has been gaining a lot of momentum over the last few years, there is still a lack of standardisation and consistency in approach across the industry. There are many different metrics and data providers with slightly different methodologies, which can be daunting when starting on your journey.
Thankfully, as there is a collaborative effort to bring about real-world benefits, peers and organisations such as the PRI are willing to work together and share ideas about best practice. This support network and knowledge sharing is incredibly helpful, especially when starting out, and is imperative to ensure that thinking continues to evolve.
What do you know now that you would like to have known when getting started? e.g. What would you advise others to consider when starting out?
Responsible investment is far reaching, in that it requires the entire investment process to embed consideration of ESG factors into every step. Engaging colleagues from other areas of the business in the responsible investing journey early can really help to ensure that everyone understands what we are trying to achieve and how we plan to get there. Ultimately this is a collaborative effort and it is essential to weave responsible investment within the end-to-end process. This an area which is continuously evolving, progress is key and the effort involved must not be under-estimated.
What positive results – e.g. for your organisation, your clients, your beneficiaries – has your responsible investment approach had?
In 2020 we made a public commitment to achieve Net-Zero by 2050. We followed this by joining the Net-Zero Asset Owner Alliance in 2021 and publishing our interim targets. While the road ahead is long, we believe this will have a positive impact on our wider environment and therefore our stakeholders.
As part of this commitment we have also increased our investments in sustainable assets; within our shareholder illiquid assets book, in 2020, we invested a total of £888m in sustainable sectors such as renewable energy and social housing – about 62% of the assets originated for the shareholder book that year.
We also launched the Standard Life (a Phoenix Group brand) Sustainable Multi-Asset ESG default solution for Standard Life pension fund clients and their members, and increased our range of responsible investment self-select funds to give our customers more choice.
This series tells signatories’ stories of getting started in responsible investment, looking at why they started and offering tips for doing so that others can learn from.