ESG integration
The integration of environmental, social and governance (ESG) considerations into investment decisions plays a key role in our overall approach to responsible investment. We look at what that means for your clients’ investments with us.
What do we mean by ESG integration?
We describe ESG integration as the systematic, explicit and transparent integration of material environmental, social and governance considerations into the processes for investment research, investment analysis and decision-making.
This means first of all understanding which of these factors may have an impact on the future performance of investments. And then taking the appropriate steps to minimise any negative impact and maximise any positive impact these could have.
Why is ESG integration important?
We believe that analysing and integrating E, S and G factors can help asset managers to identify material risks and issues in the companies and sectors in which they’re investing and to make more informed decisions. In turn, we believe that those companies which are best prepared for a more sustainable future are more likely to deliver better long-term returns for our customers – your clients.
In addition, we believe that integrating ESG considerations can help build relationships with the companies which our asset managers invest in on behalf of your clients. By understanding areas where these companies need to improve, they can target their engagements to help promote development and influence change.
ESG integration and our investment options
We ask all of our asset managers to consider ESG factors in their investment decision-making. So you can be confident that all of our investment options include ESG integration as standard.
Royal London Asset Management manages most of our customers’ investments, including our Governed Range portfolios – the Governed Portfolios and the Governed Retirement Income Portfolios.
Within Royal London Asset Management, the integration of ESG considerations into investment processes is the responsibility of individual investment teams. Fund managers and analysts review ESG and climate issues when considering the suitability of an investment for their funds or portfolios. They’re supported by a dedicated Responsible Investment team, which:
- Provides subject matter expertise
- Helps identify ESG risks and opportunities across equity, fixed income and property asset classes
- Helps the teams integrate these into the investment decision-making process.
The Responsible Investment team provides support through:
- ESG insight
- Informal analysis and challenge
- Formal ESG portfolio reviews
- Proxy voting, engagement and ESG research.
To find out more about ESG integration across asset classes for our Governed Range portfolios, see our Investing responsibly with us guide.
More about Royal London Asset Management’s ESG approach
Royal London Asset Management uses a mix of internal and external ESG research to inform investment decisions. It has developed a bespoke ESG Dashboard and analytical tools to enhance fund managers’ ability to make active investment decisions.
These tools collate and summarise ESG information at company level, including voting and engagement data, basic ESG scoring and trends, and detailed carbon performance data and analytics.