Railpen publishes member-dedicated sustainable ownership review

The compact report, a follow-up to Railpen’s detailed Stewardship Report published in May 2022, explains Railpen’s work using straightforward language, bringing it to life with case studies, and is complemented with a jargon buster to support members’ understanding. Within the 16-page report, Railpen explains how it encourages portfolio companies to address governance and sustainability issues in support of long-term investment outcomes. This comes as the Financial Reporting Council reconfirms Railpen as a signatory of the UK Stewardship Code*. 

To support in drafting the review, Railpen asked members over 2021 and 2022 what areas they are most concerned about. Through a series of interviews and surveys, Railpen listened to members about how they want to be communicated with on ESG-related issues. The top three concerns are:  

• Fair treatment of workers  
• Climate change  
• Fair pay  

The members surveyed were interested in hearing more about how Railpen addresses these concerns, and other issues, and wanted more real-life examples, and relatable information which better explains the numbers and outcomes referred to in Railpen reports.  

Railpen will survey members again later in 2022 to understand whether views have changed. 

The Review highlights: 

• Executive pay at Rio Tinto, and how Railpen utilised its voting rights to influence for fair pay – a common occurrence at Annual General Meetings where 59% of the time Railpen votes against, abstains, or refuses to support company management, most commonly in respect of executive pay and quality of Board directors.  

• Railpen’s activity on the treatment of workers, the transparency companies provide on information like health and safety, diversity and employee turnover, and the ways Railpen is advocating for greater disclosure through policy and regulatory change. 
• The creation and launch of major collaborative engagement campaigns led by Railpen, including the $1 trillion of global pension fund assets backing the Investor Coalition for Equal Votes with Railpen under the ‘One share, One vote’ campaign. 
• Railpen’s Net Zero engagement approach: creating a detailed, proprietary framework for identifying priority companies, assessing these companies’ alignment to the Paris Agreement, encouraging them to make progress on specific engagement objectives, measuring progress and then using this feedback to shape further engagements with the firm. Within the report Railpen uses a case study to discuss progress on one of the 41 companies Railpen engaged with as part of its Net Zero Engagement Plan. 

John Chilman, CEO of Railpen, commented: “Our job is to protect and grow the value of our members’ assets to ensure they can retire securely. We do this by investing in companies that we believe will do well in the long-term.  

“We believe the most successful companies in the long-run are well-run, treat their suppliers, customers and workers fairly and seek to address all the risks and opportunities related to how their business works – which include ESG issues. They can adapt their business models to deal with major threats or issues, such as the COVID-19 pandemic, climate change or an ageing population. Our size means that we have a responsibility to take the lead on sustainability initiatives, activities and policies, and we are pleased with our progress so far.” 

Christine Kernoghan, Chair of The Railway Pensions Trustee, said: “As well as engaging with the companies we invest in on our members behalf, we continue to listen to our members through research and insights. Our Sustainable Ownership Review combines data, real stories and the issues which are most important to our members within a compact, accessible report. It’s vital we work closely with members, understanding their views and shaping our approach and communications around their needs. It is clear that our members care about how we invest and consider climate and social issues highly important. Our members trust us to invest responsibly, to be active stewards, and to be accountable, all of which we’re able to demonstrate in this review.”