This means understanding which of these factors may impact future performance of our investments, and in turn taking the appropriate steps to minimise any negative impact this may have.
In simple terms, by understanding how these E, S and G factors may impact investments, we believe this allows more informed investment decisions to be made, which in turn, results in better outcomes for our members.
Integrating ESG factors in our processes not only helps with investment decisions, but also in guiding the future relationship we build with the companies we invest in. By understanding areas where these companies need to improve means we can target our engagements to promote development and influence change.
We will have ESG factors integrated across all our investment solutions, not just a specialist few.
Our asset managers combine both quantitative and qualitative information when making decisions and incorporating ESG factors is no different. To do this, Royal London Asset Management will use a range of industry data to score each security based on E, S and G criteria. This is then supported by the expertise of the Responsible Investment team who provide further insights and analysis to the score developed using quantitative data. All of this, in addition to the financial security analysis, results in informed portfolio construction as well as the basis for future stewardship and engagement activities.
The graphic below provides an overview into each stage for successfully integrating ESG factors in our processes.