Responsible investment (‘RI’) is fundamental to our investment approach. As a long-term investor and representative of asset owners, we are committed to the effective and active stewardship of the companies in which we invest, regardless of asset class.
We believe businesses that are governed well and manage environmental and social factors are more resilient, able to survive shocks and have the potential to provide better financial returns for investors. It is therefore important that responsibility for RI does not sit with a single, siloed team, but is embedded throughout the organisation with appropriate oversight.
Our approach to RI is developed in collaboration with our Partner Funds. We embed environmental, social and governance (‘ESG’) analysis into our investment process across all asset classes.Access our Responsible Investment reports
At the core of our approach as a responsible investor is our role as an active steward of our customers’ capital. We know we are stronger together, and we use our collective voice to hold companies to account via voting and engagement in order to have a real world impact, all in pursuit of our purpose to make a difference.
How do we do this?
Watch the video to the right to hear Jane Firth, Head of Responsible Investment, explain our approach to engagement, what we mean by ‘active steward’, and how our approach works in practice.
Engaging to make a difference
As a long-term investor and representative of asset owners – our Partner Funds – we are committed to being active stewards of the companies in which we invest, regardless of asset class, whether this be traditional listed equity and fixed income or private markets assets.
Click below to find out more.
As an active investor, we embed responsible investment at the heart of our analysis and investment decision-making process for all assets. We have an in-house Responsible Investment team which acts as our centre of expertise, providing research and support to mitigate and manage material environmental, social, and governance risks.
We are a long-term investor and representative of asset owners and hold companies and asset managers to account regarding environmental, social and governance issues, including climate
change factors, that have the potential to impact corporate value.
We believe that engagement is a vital component of active stewardship. Meeting and engaging with companies are integral to the investment process. As part of our stewardship duties, we monitor investee companies on an ongoing basis and act if investment returns are at risk.
Environmental, social, and governance (ESG) factors tend to be longer term in nature and can pose real material financial risks to an investment, but can also create opportunities. It is therefore important that, as a long-term investor, we take them into account when analysing potential investments. The factors considered are those which could cause financial and reputational risk, ultimately resulting in a reduction in corporate and shareholder value.
Our engagement strategy includes several different strands to engaging with our investee companies:
- Our internal portfolio managers and specialist Responsible Investment team engage directly with companies within our portfolios.
- Our appointed external managers engage with companies on our behalf and provide details as part of their reporting cycles.
- We work in partnership with Robeco, our voting and engagement partner, who engage with companies we own globally across several ESG themes on our behalf. This allows us to better fulfil our stewardship objectives as an active shareholder in overseas markets.
- As a member of LAPFF we have added our voice to an influential group of local authority pension funds and pools, to maximise our influence as shareholders.
- We collaborate with like-minded investors and bodies to create a stronger voice on ESG issues.
We have pledged to achieve net zero greenhouse gas emissions across our investment portfolios by 2050 or sooner and are a member of the Net Zero Asset Managers’ Initiative.
Climate change is an existential threat to societies across the world – doing nothing is not an option. Representing asset owners with c.£60bn of assets (at 31 March 2023), we have a key role in not just managing the impact of climate change on our portfolios, but also in supporting the investment needed to transition to a low carbon future.
Our roadmap to achieving net zero has now been published.
For more information on how we will turn our ambition into reality, access our full Net Zero Implementation Plan at the top of this page.
Being an active steward and using our voice on company votes is a key part of our engagement work at Border to Coast. We continue to evolve and strengthen our approach to ensure we remain an effective long-term, responsible investor on behalf of our Partner Funds. For 2023, we have updated our voting policy with key changes made to our voting intentions with regards climate change and diversity.
Companies that are not making sufficient progress in mitigating climate risk are identified using the Transition Pathway Initiative (TPI) and the Climate Action 100+ (CA100+) Net Zero Benchmark.
- We will vote against the Chair of the Board where companies are scored 2 or lower by the TPI, and where oil and gas companies are scored 3 or lower.
- Where a company is covered by CA100+ Net Zero Benchmark, we will vote against the Chair of the Board if it fails any of the first four indicators: a clear ambition to reach Net Zero by 2050 or sooner , as well as short, medium and long-term emission reduction targets.
- Where a bank materially fails the first four indicators of the TPI framework for banks, we will vote against the Chair of the Sustainability Committee.
- We are committed to supporting a just transition, which will influence voting on a case-by-case basis.
We support the government-backed Davies report, Hampton Alexander and Parker reviews, which set goals for UK companies regarding the representation of women and ethnic minorities on boards, executive teams and senior management.
We will vote against the Chair of the Nomination Committee where:
- Boards are composed of less than 33% female directors in developed markets.
- Boards have no female representation in Emerging Markets and Japan.
- Boards do not have at least one person from an ethnic minority background in FTSE 100 companies.
You can read all of our Responsible Investment policies in our Document Library.
We believe in the power of engagement rather than divestment as we believe that constructive dialogue with companies in which we invest is more effective than excluding companies from the investment universe.
Our investment approach is not to divest or exclude entire sectors, however there may be specific instances when we will look to sell or not invest in some industries or companies based on investment criteria, the investment time horizon, and if there is limited scope for successful engagement – particularly in areas where we have escalated our engagement with a company but still see no changes implemented.
Using these criteria and due to the potential for stranded assets, we will not invest in companies
where more than 70% of revenue is derived from thermal coal and oil sands.
In addition, we will not invest in companies contravening the Convention on Cluster Munitions
(2008). This means we do not invest in:
- Companies where there is evidence of manufacturing cluster munition whole weapons
- Companies manufacturing components that were developed or are significantly
modified for exclusive use in cluster munitions.
- Companies where there is evidence of manufacturing cluster munition whole weapons
Our extensive work implementing responsible investment is outlined in our Responsible Investment Policy, Climate Change Policy, and Corporate Governance and Voting Guidelines, all of which are available in our document library. We also proactively publish an annual report on our stewardship and engagement activity every year.
For further detail on our activity, we publish a number of Responsible Investment Reports:
- Quarterly Stewardship Reports
- Robeco Active Ownership Reports
- Quarterly Voting Reports
- TCFD Reports
All of these documents can be found in the Responsible Investment Reports section of our document library.
Collaboration is key to maximising our influence on behalf of our Partner Funds and we do so by working with a range of like-minded institutional investors and organisations such as LAPFF, Climate Action 100+, the Workforce Disclosure Initiative, and the 30% Club.