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Our influence in the companies we invest in

How we work with the companies we invest in, to ensure we can pay members’ pensions into the future

We invest members’ money in lots of different ways, like taking both large and small ownership stakes in companies, but why do we do this?

As a pension scheme that exists for our members, we need to make long-term investments so we can pay our members’ pensions long into the future.

So, we invest in companies that can give us the long-term returns that we need to pay those pensions. Whether that’s a company like Bruc Energy, who is a Spanish solar energy platform with solar panels that can last up to 40 years, making it a great long-term investment. Or Thames Water, who takes care of water for 15 million people, offering a service needed for many years to come, this makes it the type of long-term investment that we look for.

Do we invest in any companies that members might be familiar with?

We invest members’ money in a huge range of businesses, both here in the UK and overseas, and there are plenty that our members might be familiar with. One popular name is Moto, who has service stations up and down the country. If you’ve ever stopped and had a coffee on the motorway, it’s likely you’ve been to a Moto service station.

We’re sure that a lot of our members living in London will have seen the G.Network signage around the city. It’s in the midst of laying down miles of fibre cables to bring better broadband to local residents and businesses.

We also invest in renewable energies like windfarms and solar energy. As you can see, the businesses we invest in are incredibly varied.

But they’re all invested in with one thing in mind - ensuring that we can pay members’ pensions into the future.

How do we decide which companies to invest in?

It’s really important that the companies we invest in share our values.

Before we buy a large stake in a private company, one of the first questions we ask is what their sustainability plan is.

There’s also environmental, social and governance (ESG) considerations that we integrate both before and after we invest. These are factors that measure the impact of an investment, such as how they manage the potential impact of climate change, or how they manage relationships with employees, suppliers, customers and the wider community.

We believe that the way a company manages its environmental, social and governance risks will impact the long-term financial returns that it’ll generate. We also believe that better managed companies will generate better returns. This runs to the heart of everything we do.

How involved are we in the companies that we invest in?

Whether we own a majority stake in a company or not, we still have influence. Typically, with Private Market investments, we’ll get a seat on the board which means we have a key role in decision-making.

This means we can offer our expert knowledge and give support to companies – which we call stewardship.

We make sure the companies we invest in make the right decisions to create value for our members.

On the public markets, or listed side, we also vote at the Annual General Meeting (AGM) of many of the companies that we own shares in. These are yearly gatherings of a company's shareholders where lots of important decisions are voted on. Having the right to vote on decisions is one of the most effective tools we have for holding companies we invest in accountable and encouraging positive change.

By voting, we can also have an impact on the board diversity of a business.

In 2020, we changed our voting policy from voting against companies where there’s not at least one woman on the board (or where there is no strategy to improve board diversity) to one where we expect 33% of board members to be female.

Board diversity is incredibly important, having a wide range of perspectives can lead to better decisions being made.

How have we made a positive impact in the companies that we invest in?

As already mentioned, we want the companies that we invest in to share our values. During the pandemic, Thames Water made the decision to keep their wetlands open, these are reservoirs which are also nature reserves, providing home and shelter to local wildlife. This was done so the local community who mainly live in high-rise flats, had a place to escape to and enjoy fresh air surrounded by nature.

This lifted community spirit and mental wellbeing – both of which aligns to our own company values too.

Published: 14 October 2021

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