Scottish Widows gets tougher on investment manager voting on ESG issues

The financial services giant, which manages some £170bn of assets, has this week pledged to “take a harder line with investment managers” that may be casting votes that undermine its sustainability commitments.

It has called a meeting with its main managers this autumn, alongside other Asset Owners, for the first event of its kind to discuss manager voting records and emphasise the need to take stronger action.

A key part of the update was the replacement of an old ‘climate and carbon’ theme with ‘climate and environment’. The new theme places a greater onus on Scottish Widow representatives to vote in favour of measures that conserve and restore nature when advocating for climate solutions.

Additionally, last year, Scottish Widows updated its voting position on human rights. Fund managers are expected to support progressive filings relating to worker conditions and wages, both in business operations and in supply chains.

Scottish Widows has detailed some of the past year’s key AGM votes in a new report today (5 July), including votes on plastics disclosures from e-commerce giant Amazon and votes on climate disclosures from Chevron, ExxonMobil and Shell.

“While we have been pleased with the positive strides we have made with our investment managers over the last year, there is still more that needs to be done to ensure activity is aligned with our guidelines – particularly as our thematic priorities continue to evolve,” said Scottish Widows’ head of responsible investments and stewardship, Maria Nazarova-Doyle.

“If managers fail to act in line with our priority, which will always be the interests of our beneficiaries, we will have no choice but to take action.”

Nazarova-Doyle also noted that Scottish Widows is concerned that managers are not doing enough to collect quality data on stewardship-related topics from investee companies throughout the year. Such engagement is key to ensuring that the firm does not invest in companies misaligned with its targets, without clear plans to improve their performance.

Scottish Widows’ work towards net-zero financed emissions by 2050, and its other ESG goals, is being delivered using a mix of divestment and engagement. It has divested from tobacco companies and some fossil fuel companies, for example. It may consider divesting from companies found to have violated UN guidelines on human rights, such as mining companies BHP and Vale, in accordance with the criteria outlined in its Exclusion Policy.

Climate finance commitment

The new report from Scottish Widows this week also provides an update on the company’s commitment to invest more than £1bn in climate solutions by 2025.

It confirms that the business has exceeded this goal two years ahead of time, with £1.3bn now invested. This figure includes investments in things like renewable energy, climate-resilient infrastructure and nature-based solutions.

Scottish Widows has also confirmed that it has invested £17.5bn in ‘climate-aware’ projects to date. It is aiming for £25bn by 2025.

A climate-aware project is one with tangible emissions benefits, even if this is not the sole benefit. Projects defined in this way by Scottish Widows include retrofitting social homes, working with retailers to improve energy efficiency in shopping locations and investing in electric bus manufacturing.

Join the conversation at edie’s Sustainable Investment Inspiration Sessions!

Speakers from Lloyds Bank, JP Morgan and the Aldersgate Group are among those confirmed for edie’s Sustainable Investment Inspiration Sessions taking place on Wednesday 12 July.

Hosted during edie’s dedicated Climate Finance Week of digital content and events, the Sustainable Investment Inspiration Sessions offer up an afternoon of live, interactive webinar presentations and discussions – all dedicated to mobilising and scaling up finance to accelerate climate action.

These three webinars are free to attend and will take place from 12.30pm BST to 4pm BST. They are not to be missed for anyone working in sustainability, ESG, CSR or finance.

Click here for a full agenda and to register for free.