The annual member-focused document provides an overview of Railpen’s sustainable ownership work in a simple, accessible format, alongside case study engagements and an ESG glossary. For the first time, the Review is accompanied by a series of member videos to further help them understand how Railpen considers and acts upon the ESG issues that matter most to member outcomes.
This report, which follows Railpen’s annual Stewardship Report published in May 2024, is intended to feed back directly to members on the work that Railpen has been conducting as sustainable, proactive asset owners on their behalf.
To facilitate the contents of the Review, the Sustainable Ownership (SO) team surveys its members each year to understand the matters that are most meaningful to them. In 2023/4, their top three areas of concern were:
- Fair treatment of workers
- Fair pay
- Making sure company boards can be held to account
Key Review highlights:
Promoting the worth of the workforce (one of Railpen’ members’ top concerns in 2023), including an initiative launched with other investors to encourage companies to improve their engagement with their workers, as well as collaborating with the UK government’s Taskforce on Social Factors to help draft guidance for other investors on how to consider workforce treatment issues in their investment strategies.
Ensuring sustainable financial markets through the Investor Coalition for Equal Votes (ICEV) and more broadly. Key activity highlights included a policymaker dedicated report outlining the implications of dual-class share structures for companies’ financial performance, as well as bringing UK asset owners together to respond to recent changes to the UK’s equity listing rules, advocating on behalf of robust investor protections and high corporate governance standards for companies, investors and beneficiaries.
Assessing companies’ climate risks to shape engagements with companies such as Nucor, a large US-based steel producer with a high emissions footprint, and WEC Energy, a substantial US electric utility with a reliance on coal-fired generation. In line with Railpen’s climate engagement asks, Nucor has subsequently lowered the emissions intensity of its steelmaking operations, and WEC Energy improved its climate reporting and scenario analysis.
Railpen has established regular touchpoints to understand members’ views on sustainable issues such as an online member survey, as well as dedicated member focus groups.
This year, to complement the publication of the SO Review, Railpen has created a video series to enhance understanding of the SO team’s priorities – helping distil complex topics into a simple, accessible format to help members better understand and feel more involved in the investment of their pension savings.
The first video provides an overview of the Sustainable Ownership Review and the stewardship work undertaken by the SO team. Meanwhile, the second video highlights the outcomes achieved against the SO team’s thematic priorities.
This follows insights from Railpen’s wider member communications work showing that video content is an effective engagement tool to improve members’ understanding of how the work conducted by the SO team is helping to improve corporate behaviour and drive positive financial outcomes.
Michael Marshall, Director of Investment Risk and Sustainable Ownership at Railpen, commented:
“Our member-first culture is at the core of everything we do. As more people show an increased interest in the sustainability aspect of how their money is invested, we are providing more ways for them to positively and proactively engage with and understand the subject, including how we consider and act upon the most relevant ESG issues to help protect and grow their pension savings.”
Caroline Escott, Senior Investment Manager and Stewardship Lead at Railpen, added:
“We will continue to seek feedback from members so that we can better understand the issues that matter to them and shape our communications accordingly. Our ultimate aim is to achieve a two-way dialogue with members, where they feel empowered to ask questions. This should enhance Railpen’s wider work to boost members’ engagement with their pension savings, as well as supporting our duty to protect and grow the value of our members’ benefits to ensure they can retire securely.”
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