Taking a stance
“Clear and ambitious targets on climate, a robust screening framework and outstanding measures in its ESG investment policy,” judge’s comment
WINNER
Country |
United Kingdom |
Type |
Hybrid of defined benefit and defined contribution |
Members |
95,959 active |
AUM |
€40,094m |
Performance |
4.70% (1yr) |
Railpen’s investment process considers ESG factors through four lenses: improving investment returns; reducing investment risk; being a responsible investor; and impacting the future world members retire into. This informs three priority workstreams: active ownership, ESG integration and climate.
Railpen uses a proprietary tool, Materiality Matrix, to assess ESG issues against weighted criteria, including alignment to its investment beliefs, potential impact on or importance to members, its ability to make a difference and its expertise.
Railpen’s priority ESG themes are climate transition, net zero, biodiversity and deforestation, value of its workforce, fair pay, employee voice, modern slavery, responsible technology, cybersecurity, responsible uses of AI, sustainable financial markets, unequal voting rights and external audit quality. Railpen reports on how the Group acts on climate risk and ESG factors in its annual stewardship report which, it boasts, is often cited by the UK’s pensions regulator as good practice. This report aligns with the UK Stewardship Code 2020 and is assured by Railpen’s audit team.
Railpen strives to achieve positive change in the world through proactive and decisive activity to decarbonise its investment portfolio, invest in climate solutions and positively influence the evolution of policy and guidelines. It has committed to achieving net zero by 2050 and is a signatory of the Paris-Aligned Asset Owner Commitment Statement.
In terms of exclusions, Railpen engages with companies and exercises its voting rights to offer support or sanction but if there’s a significant risk to the long-term value of its investments, it will consider divesting. Railpen has three exclusions processes: climate (tar sands and thermal coal), controversial weapons, and a forward-looking bespoke governance exclusion initiative. If the fund’s ESG analysis puts a company at risk of exclusion, Railpen will engage beforehand to establish their commitment to genuine improvement. In 2023, Railpen reinstated Dell Technologies following a new willingness on their part to engage and seek significant improvements to their governance arrangements
STRATEGIC TAKEAWAYS
➤ ESG considered through four lenses based on risk, returns and impact |
➤ Key ESG themes include climate transition, net zero, modern slavery, cybersecurity and responsible uses of AI |
➤ Exclusion policy based on engagement and improvement over divestment |
HIGHLY COMMENDED
Country |
United Kingdom |
AUM |
€44,000m |
Performance |
12.10% (1yr) |
For Nest, incorporating and acting upon climate risk and other ESG factors is a significant driver of investment outcomes. Integrating sustainability factors into its investment process, from asset allocation and benchmark construction to manager selection and risk management, helps the fund support identifying and ultimately pricing ESG risk and opportunity. Its policy is driven by seven priority areas: climate change, nature and biodiversity, human capital, human rights, digital rights and technology, diversity, and health and food systems.
Country |
France |
AUM |
€43,326m |
Performance |
9.94% (1yr) |
ERAFP adopted at inception an SRI charter that applies to all investments and that addresses the most pressing challenges for socially responsible investors. It comprises five core values: rule of law and human rights, social progress, democratic labour relations, the environment and good governance and transparency. To ensure it is effectively implemented through all the investment decisions made on its behalf, the charter is a contractual obligation written into its external asset managers’ mandates.
Judged by
Robert Black
Greta Fearman
Sophie Grenier van Straelen
Jakob Thomä
Sponsored by
