Stewardship has moved well beyond voting statistics. For pension investors, it is now about whether engagement is shaping real-world outcomes across climate, people, governance and systems-level risks.
Royal London Asset Management's Stewardship and Responsible Investment Report 2025 provides a view of where we see stewardship is delivering traction – and where long-term risks remain underpriced.
Below, we highlight five themes shaping stewardship outcomes for pension schemes, drawn from our engagement activity during 2025.
1. Climate transition: progress is uneven – and political risk matters
A decade after the Paris Agreement, climate change is now a core business risk, not just a sustainability issue. Our stewardship focus in 2025 reflected this shift from ambition to execution.
Through our Net Zero Stewardship Programme, we engaged companies responsible for over half of our financed emissions, assessing whether transition plans translate into capital allocation, incentive structures and real emissions reductions.
While some companies strengthened disclosure and near-term targets, overall progress remained mixed. Political uncertainty and policy volatility are increasingly influencing corporate decision-making – slowing alignment in some sectors, even where climate ambition is publicly stated.
Why we believe this matters: Delayed or poorly governed transitions increase stranded-asset and volatility risks across portfolios. Engagement must increasingly test delivery, not declarations. Read the article.
2. Just transition: social risks can derail climate pathways
A defining feature of our stewardship work is the integration of just transition into climate engagement. Since 2019, we have assessed how companies consider workers, communities and customers as part of the transition.
In 2025, this included collaborative engagement with UK banks, examining how lending, product design and regional strategies support a fair transition. Progress was strongest in sustainable finance and product innovation, but place-based and community impacts remain underdeveloped across the sector.
We also pushed for stronger just transition approaches in high-impact sectors such as mining, energy and utilities.
Why we believe this matters: Climate transitions that overlook social impacts risk political backlash, regulatory intervention and operational disruption – all of which ultimately can affect long-term returns. Read the article.
3. Interconnectivity: climate, nature and people are converging
Perhaps the clearest shift in stewardship is the move towards holistic, interconnected thinking when engaging on issues. For example, climate cannot be addressed without nature, and environmental action cannot succeed without social legitimacy.
In 2025, we deepened work on the climate–nature nexus, biodiversity and just adaptation – engaging companies exposed to physical climate risks, land use and supply-chain disruption.
The message from engagement is clear: siloed sustainability strategies may no longer be credible.
Why we believe this matters: Systemic risks do not stay contained within asset classes or sectors. Stewardship that recognises interconnections is essential for long-term portfolio resilience. Read the article.
4. Governance and voting: escalation is becoming the norm
Voting is no longer a backstop – it is an active escalation tool. A member of our Responsible Investment team reviews every single vote. Because of this, informed judgement always takes precedence in the final decision. In 2025, we voted at over 4,000 meetings globally and escalated on issues including climate oversight, executive pay, board accountability and workplace culture.
We increasingly voted against directors where companies failed to demonstrate credible governance of climate, biodiversity or human rights risks. Executive remuneration also remained a focus, with nearly a third of global pay proposals opposed where alignment with long-term value creation was weak.
Why this matters: Governance failures often precede financial underperformance. Stewardship that links engagement and voting is critical for protecting long-term value. Read the article.
5. Technology, AI and cyber risk: stewardship is catching up with reality
Rapid advances in AI, digitalisation and data infrastructure are reshaping corporate risk profiles – often faster than governance structures evolve.
In 2025, we expanded engagement on sustainable and ethical AI and cyber resilience, including work with technology developers and users across sectors. Key gaps remain around board expertise, incentive structures and transparency on system resilience and resource use.
For data-intensive sectors, environmental impacts – particularly energy and water use – are increasingly material alongside ethical risks.
Why this matters: Technology risks are now systemic. Weak oversight can lead to abrupt value destruction, regulatory costs and reputational harm across portfolios. Read the article.
What we believe pension schemes can take away
From a trustee and investment committee perspective, several conclusions stand out:
- Stewardship outcomes matter more than activity metrics
- Social and governance risks are now financially material transition risks
- Collaborative engagement can move markets – but only with clear expectations
- Voting remains a critical escalation lever
- Long-term value demands holistic, interconnected thinking
For pension investors navigating an increasingly complex risk environment, stewardship is no longer optional – it is a fundamental tool for protecting and enhancing long-term outcomes.
Voting, engagement, research, and advocacy help shape outcomes and support better corporate practices. However, voting and engagements may not always apply to a specific Royal London Asset Management fund or strategy, as each will have different investment objectives. Please check the specific product objectives for details.
Past performance is not a guide to the future. Capital at risk.
For professional investors only. This material is not suitable for a retail audience. This is a marketing communication. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. The views expressed are those of the author at the date of publication and are subject to change without notice. Not all strategies always consider climate in the same way, as each will have different investment objectives. Please check the product details on specific objectives and outcomes. Forward looking statements are subject to certain risks and uncertainties. Actual outcomes may be materially different from those expressed or implied.
Issued in July 2026 by Royal London Asset Management Limited, 80 Fenchurch Street, London, EC3M 4BY. Authorised and regulated by the Financial Conduct Authority, firm reference number 141665. A subsidiary of The Royal London Mutual Insurance Society Limited.
