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Stewardship and responsible investment 2022 report

Our approach to stewardship, the responsible investment activities we have recently undertaken and how we integrate ESG into investment decision making.

“This is the time to be active, engaged, and part of the solution.”
– Ashley Hamilton Claxton, Head of Responsible Investment

As active managers we play an important role in helping, encouraging, and persuading companies to do better. Whether it is asking them to take a leadership role in promoting ethnic diversity in the boardroom or questioning them on cybersecurity – we engage with companies to bring about positive change. We view this as a vital part of being an active manager and a good steward of our clients’ assets.

Download our 2022 report

Still image from Stewardship and responsible investment report video.

Our highlights



A record high 44,452 resolutions voted on at 3,765 meetings.


We engaged with 221 companies via 368 interactions over the year (173 climate-related engagements).

ESG research

Launched internal ESG Dashboard, complete with proprietary scoring model.

ESG integration

Successfully moved our passive equity funds to ESG tilted strategies (over £20bn AUM). At least 10% (UK) and 30% (all others) lower carbon intensity than their benchmarks.


RLAM’s Property team announced its net zero pathway and refreshed its responsible property investment strategy.

Industry recognition

Confirmed signatory status to 2020 UK Stewardship Code.

Engagement – focus projects for the Responsible Investment team

As an asset manager active across asset classes and regions, we need to play our part in tackling climate change. There are a number of ways we can do this. As an allocator of assets on behalf of our clients, we can channel capital towards less carbon intensive companies or assets and away from those companies unable or unwilling to change. In 2021, we took a major step forward by changing our market-weight passive equity funds to incorporate quantitative carbon tilts. We have also started to embed a net zero pathway into how we acquire and manage properties, with a view to having a net zero property portfolio by 2040. We are also increasingly using carbon and climate analysis when choosing whether and how to lend to companies within our fixed income funds.

A second powerful tool for us is engagement and advocacy. This is something we at RLAM feel passionate about – we do not see the value of ‘greening our portfolio’ without thinking about the impact on the real world. It’s no good simply selling ‘dirty’ assets if someone else will buy them and continue polluting as normal. Therefore, we are continuously enhancing our engagement with companies and focusing more of our time and effort on examining the credibility and progress of their climate transition strategies. Our goal is to ensure companies set targets aligned with an ambition to limit global warming to 1.5°C, work to enhance their climate transition plans and act now in reducing real-world emissions.

Our climate transition engagements span multiple sectors and incorporates both forward and backward-looking data and analysis. This includes looking not only at past carbon emissions that are reported by companies, but also understanding future ‘warming’ trajectory and companies’ strategies and plans for reducing emissions and meeting net zero targets. We have started with the companies that have a significant impact on the climate profile of our funds – particularly energy and heavy industry – and we are expanding to now look at banks and other contributors to ‘Scope 3’ emissions.

We spoke to 70 companies in depth on climate during 2021, and contacted 19 companies specifically to ask them to implement our net zero engagement framework. These companies operate within the energy utilities, oil & gas, semiconductors, mining, banks, chemicals, and food & packaging sectors.

Ethnic diversity

We first outlined our ethnic diversity engagement project in our 2021 Stewardship Report. The initial phase consisted heavily of learning from best-in-class companies about the innovative and progressive ways they were addressing ethnic diversity, and also determining the more inclusive practices we ourselves were applying internally.

Our work in 2021 centred on identifying those companies that we considered to be ‘lower performers’ in terms of ethnic diversity practices, and using the knowledge gained in 2020 to steer our discussions. We contacted nine companies to assess how their goals and ambitions were aligned with improving minority ethnic diversity and inclusion (D&I) practices across all business levels, how they were governing and overseeing these initiatives and whether/how they intended to meet the recommendations of the Parker Review, where the target is for FTSE boards to appoint at least one board director of an ethnic minority background by 2021 (2023 for FTSE 250 companies). We also sought to encourage the capture and public disclosure of ethnicity data.

Workforce engagement

There is a growing recognition that company boards must improve measures to understand the needs of the workforce. Specifically, the role that positive corporate culture plays in cultivating an engaged workforce, and an engaged workforce can ultimately lead to increased benefits to company competitiveness. In 2021, we continued our workforce engagement project, building on the work first outlined in our 2020 Stewardship Report.

Our objective was to apply the knowledge gained in our 2020 outreach to help companies we had identified as laggards in this area to improve their disclosure and practices around workforce engagement. We held successful engagement meetings with eight out of the nine companies identified. The ninth company failed to respond to multiple attempts to meet with them.

With cyber-attacks affecting governments as well as businesses of all sizes, cybersecurity is now widely recognised as an issue of national and economic security. In the US, the Biden administration issued an Executive Order to modernise federal government and infrastructure defences, as well as calling on the private sector to increase its actions to address growing cybersecurity threats. In Europe, Members of the European Parliament voted unanimously in October 2021 to strengthen cybersecurity rules to protect EU member states from an increasing number of online attacks.

This follows the World Economic Forum’s calls for private and public sectors to adopt the concept of ‘Zero Trust’ more stringently as an effective approach to prevent data breaches and mitigate the risk of supply chain attacks. Such calls also emphasise the importance for companies to have strong and dynamic security strategies, particularly those that run on legacy, broad and complex systems and/or are exposed to trusted third-party systems or software.

Engagement with portfolio companies

In 2020, we initiated critical engagement on cybersecurity with our holding companies as part of our broader ‘Innovation, technology and society’ engagement theme. This engagement took place just as Covid-19 was shutting down offices and displacing a large proportion of the global workforce to remote locations. The widespread use of technology, and the continuous reliance of business on digital access, has exacerbated the cybersecurity risk to companies of all sizes and sectors.

In 2021, we continued our engagement from 2020, contacting 24 companies, including some that did not respond to us previously. We also contacted several new companies, particularly issuers of debt instruments, to better evaluate cybersecurity risk within our credit portfolios, as the issue is equally material for both debt and equity asset classes. Our findings from these conversations point to the value of engagement and aid our understanding of the risk mitigation measures that companies have in place – which may not be obvious from their public disclosures.

Case studies - stewardship and responsible investment in action

We met with HSBC’s Global Chief Sustainability Officer to discuss our expectations on how banks can meet net zero targets. During the meeting, HSBC agreed to ensure quality disclosure on the methodological assumptions and limitations of achieving this target. We specifically discussed the coverage and quality of the data to assess baselines for its targets and to ensure key emitters are covered. HSBC informed us it would refresh its lending policies and add detail to its commitment to phasing out coal lending by 2040, a commitment announced in December 2021.

We asked for further clarity on what HSBC understands and defines as ‘transition finance’ and how it engages with its clients to support this. Furthermore, HSBC agreed with us on considering the social impact of its climate plans and embedding Just Transition considerations. The company informed us that it included social impact in its sustainability strategy under the framing of ‘inclusive’ growth. We also discussed barriers to growing the green bond market in Asia, the process by which it ensures classification of ‘green’ lending and finance is robust, and how it can scale financial solutions for Asia’s climate transition.

Later in the year, we provided feedback on HSBC’s coal policy, including suggestions on how to improve the aim, scope, accountability and oversight, and timelines of the policy, as well as the use of climate transition plans as a tool. We asked it to specify different aspects of the policy to strengthen its immediate effect.

Overall, while we have had a series of constructive conversations and learned about HSBC’s net zero strategy and its likely implementation, we will continue our engagement to get further comfort about the methodologies behind its targets.

In 2021, Royal Dutch Shell (Shell) put forward an energy transition plan for a vote at its AGM. At the time, only a handful of companies had done this, mainly in efforts to address the pressing issue of climate change more closely with shareholders. In Shell’s plan, targets were set towards meeting the goal of the Paris Agreement, limiting the increase of the average global temperature to 1.5°C, thus becoming a net zero company by 2050.

While we welcomed Shell’s approach to publish a strategy for shareholder approval, upon further review, we found concerns with its significant reliance on offsets and carbon capture as part of its long-term ambition to reach net zero across its operations. We were also concerned with the emissions that come from its products – the fossil fuels we burn when we drive our cars. Moreover, we would have preferred to see a stronger push by the company toward its short- to medium-term targets. Therefore, we elected to abstain on the vote.

In conjunction to the proposal, FollowThis – a Dutch shareholder activist group – had also presented a resolution to shareholders regarding its aim for Shell to set firmer targets on its greenhouse gas emissions. While this proposal closely mirrored much of what Shell’s energy transition plan would incorporate, in our view, FollowThis set more appropriate operational targets and short- to medium-term goals. These were key areas lacking in Shell’s original plan and as such, we voted in favour of the shareholder resolution.


In January 2021, we were asked to vote on Cineworld Group’s newly proposed long-term incentive plan, which was put forward by its board in response to the impact of the pandemic on the cinema industry. While we acknowledged the ambition of the new award, and its alignment of directors and other shareholders, we had concerns.

The plan provided for excessive pay-outs based on a single share price hurdle as the only performance metric used for this award. Such structures, given the wider Covid-19 context and significant share price depression, posed a risk of excessive grants. Furthermore, the factor at which the grant was linked could be outside of the control of participating executives, and instead connected to a broader economic recovery. Based on this rationale, we decided to vote against the proposed plan, contributing to the 30% of total votes cast against the company’s proposals.

In May 2021, we voted at Ocado Group’s AGM, having long held several concerns with the company’s approach to a wide range of areas, including pay, board composition and diversity. However, recognising our engagement with Ocado earlier in 2021, we commended the company on its actions towards diversity and inclusion. In particular, we noted efforts to improve its board composition with a new board member in the year from a Black, Asian and Minority Ethnic (BAME) background, as well as its inclusion of different cultures into the workforce through existing programmes and networks.

Previously, we had voted against the chair of the nomination committee due to insufficient board diversity, but in recent times diversity has notably improved, albeit with more work required on gender balance. Still, we acknowledged that a new chair of the nomination committee was being put forward for election at the AGM vote. Given the new role, and in light of previous engagement, we voted in support.

However, we continue to have concerns over remuneration, and the potential quantum of awards able to vest for executive directors under the company’s value creation scheme. No share awards were banked under the plan during 2021, somewhat dampening our concerns over pay outcomes seen in 2019/20. We chose to abstain on the remuneration report this year, given concerns over maximum award opportunities. We also abstained on the remuneration committee chairman’s re-election, seeking further engagement with the company first.

Additionally, we voted against the re-election of Jorn Rausing as nonexecutive director. Rausing is not considered independent and given Ocado Group’s board overall lacked sufficient independence, we felt it was appropriate to object to his reappointment. We would prefer to see Ocado Group’s independence improved. Moreover, we abstained on the incumbent chief financial officer’s election due to his joint role as executive and company secretary, as we believe these two positions should be separate.