Today, engaging with the management and boards of investee companies is required of all good asset managers - it is no longer the haunt of activist investors.
Asset managers must act as good stewards of client assets, and not just ensure that investments provide steady financial returns, but also that they uphold minimum environmental, social and governance (ESG) standards. At RLAM, we value engagement as a versatile tool and use it in the pursuit of two key goals: delivering sustainable outcomes; and managing ESG risks and opportunities. Our engagement spans both equity and fixed income funds because we think good stewardship should be applied regardless of asset class. This requirement is now included in the 2020 UK Stewardship Code and is understood as global best practice.
Managing ESG risks and opportunities
The majority of RLAM's engagement activity involves the management of ESG related risks and opportunities (97%), and a third aims to achieve a sustainable outcome at the same time - our engagement with energy utilities companies is a good example. Firstly, engagement with energy utilities companies serves as a fact-finding mission, assessing their preparedness for the energy transition ahead, helping us to improve our decision making and reducing potential risks. The engagement also aims to generate a sustainable outcome by encouraging firms to plan for a ‘Just Transition', minimising the negative social impacts of the energy transition.
Past performance is not a reliable indicator of future results. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author's own and do not constitute investment advice.
About us: Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, managing assets on behalf of a wide range of clients. Our experienced team of investment specialists manages around £147.2 billion of assets (as at 31.03.2021), investing across all major asset classes. Our funds are aimed at meeting a broad range of investor needs.
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