Sustainability and inclusion and diversity
Responsible investment
The Trustee believes that investing responsibly, by integrating environmental, social and corporate governance (ESG) issues, including climate change and diversity, equity and inclusion, into the investment decision making process, and engaging as long-term owners can be financially material to long-term investments. We understand this not risk free but we also believe climate change to be one of the most significant risks the Scheme faces. It is important to aim to minimise the harm done by the decisions we make whilst keeping in mind our financial responsibilities to members like you.
As far as is practical we are aligning our approach with the goals of the Paris Agreement and have set targets to help limit the implied temperature rise to a 2.2°C pathway by 2030. This is in line with the commitments made by Schroders.
Our ESG investment beliefs
- ESG issues can be financially material to long-term investment portfolios and should be considered as part of the investment process and reviewed regularly.
- Taking a broader and longer-term perspective on risk, including identifying sustainability themes and trends, is likely to lead to improved risk management and new investment opportunities. Performance assessments should focus on the longer term with a strong focus on sustainability.
- Long-term sustainability issues, in particular climate change, pose a systemic and material risk, and investors should consider the potential financial impacts of both the associated transition to a low-carbon economy and the physical impacts of different climate change outcomes. The Trustee supports the goals of the Paris Agreement.
- Stewardship (or active ownership) can add value to the Scheme’s assets in the long term and the Trustee will therefore seek to appoint managers who demonstrate strong engagement credentials, where portfolio relevant.
- Trustee will therefore seek to appoint managers who demonstrate strong engagement credentials, where portfolio relevant.
- Managing risks related to climate extend beyond carbon emissions and should consider nature related, biodiversity-related or natural capital-related issues.
- Inclusion and diversity should be considered in the selection and retention of investment managers.
ESG integration
The Trustee looks at the ratings for all funds offered and how ESG is integrated into these. We are comfortable with the overall level of ESG integration within the Scheme. That said, we believe there is more that can be done and will continue monitor the position and take action as needed.
Within your investment options we include the Schroder Sustainable Multi-Factor Equity Fund as part of the Scheme’s default investment option, which integrates ESG risk factors into a systematic investment approach. That fund is also available as a self-select option along with the Schroder Life QEP Global Sustainable fund and LGIM Future World Global Equity Index fund – both of which are specific sustainable investment options.
Inclusion and Diversity
The Trustee considers the inclusion and diversity polices of each of the Scheme’s investment managers. This reporting is included in the reporting we receive, so we can see if they are following the policies they have in place, allowing us to take action as needed. We also want the Scheme to be as inclusive as possible, which is why funds such as the Schroder Islamic Global Equity fund, a Sharia compliant investment fund, is available as an investment option.
Want to know more
You can find out more about what were are doing in this area in our Climate Change Report, Chair’s Governance Statement, Implementation Statement and Responsible Investment and Voting policy.