Scottish Widows unveils responsible investment and stewardship framework

Scottish Widows has launched a new responsible investment and stewardship framework, outlining plans to enhance its sustainability practices and influence positive change across the industry.

The framework provides greater transparency on how the insurer will develop its investment fund range, helping address the material financial risks and opportunities linked to Environmental, Social and Governance (ESG) issues. It will help shape decisions on asset allocation, manager selection, fund research and engagement activity.

Developed by Scottish Widows’ new Responsible Investment team, the focus of the framework is to integrate responsible investment activity across the fund range and ensure it meets customers’ evolving needs.

Made up of six principles of responsible investment, the framework includes implementing exclusions across funds managed and mandated by Scottish Widows, such as its workplace pension default funds; reducing the carbon intensity of their equity exposure; and developing a broader range that enables customers to support causes close to their hearts.

With the aim of extending these principles to all asset classes over time, the team will work with policymakers and the industry to promote direct investment opportunities required to successfully transition to a lower carbon economy.

The framework also outlines the insurer’s stewardship approach to influence positive change among companies that are failing to address climate change risks. It will also enhance the existing strong governance of fund manager partners to deliver better investment outcomes for customers.

Maria Nazarova-Doyle, Head of Pension Investments at Scottish Widows, said: “Our role is to keep our customers’ money safe and help them plan for their financial future. Large-scale challenges we are facing today, such as climate change, make our role even more important. We must aim to deliver the best possible retirement outcomes for our customers, and that’s at the heart of our responsible investment approach.

“As the industry focus on responsible investment grows, so does our customers’ interest in investing more sustainably. To continue delivering competitive returns for our customers, we must fully embrace responsible investment practices, which will allow us not only to manage risks and returns in a more effective way in the funds that we offer, but also empower customers to invest their savings in a way that reflects their values.”

Scottish Widows will continue to collaborate with the industry to drive positive action through membership of the UN Principles of Responsible Investment and the Institutional Investors Group on Climate Change. Its commitment to responsible investment is fully supported by Lloyds Banking Group, which recently unveiled its ambition to help reduce the carbon emissions it finances by more than 50% by 2030.