Stewardship – an important part of our investment strategy

We’ve now published our latest Stewardship Report for 2025, which looks at what we’ve done to meet the UK Stewardship Code principles – something that’s widely recognised as the leading stewardship framework globally. The report looks at our approach to stewardship, our policies and processes, and some examples of our activities, but I wanted to touch on what stewardship means for us here and bring some of our activities to life.

What stewardship means for us and how we do it

Stewardship is a core part of our investment approach and plays an important role in us being a responsible investor. We formally define it as the responsible allocation, management and oversight of capital, to allow us to protect and enhance long-term value for the scheme. What this means in practice is being an active owner of the companies and assets we invest in by using our rights as a shareholder to understand and influence the behaviour of the businesses and support their long-term success. This essentially means we don’t just buy an asset and leave it on our books in the hope it’ll succeed on its own. We exercise ownership rights and engage with our assets as an active, long-term owner to nurture and enhance their long-term value.

This engagement could be via meetings, calls, emails or letters in which issues are discussed and our expectations are made clear. Good engagement will cover financially material factors that could affect an investment, including responsible investment matters that relate to our current priority themes of climate, governance, nature and people. We take a focused approach and establish priorities under each of these themes, so that we can seek to make a difference in those areas that we think are most important and where we believe we can have the greatest impact.

Voting is another part of being an active steward of the companies we invest in – owning shares in a company gives us the right to vote on key decisions that a company makes. It’s a tool that helps us hold company management to account, encourage good governance and drive improvements. We vote in line with our members’ best financial interests and will vote against companies where we have fundamental concerns, for example if a company is failing to meet our expectations around the management of climate risks.

However, it’s more than just active engagement and voting. It’s also about engaging with policymakers and regulators in the markets we invest in to address risks and opportunities, as we have an important role to play in promoting the proper functioning of markets and economies. And it’s about collaborating with other asset owners and investors to share views, best practices and provide a collective voice to advocate for and influence positive change.

Ultimately, stewardship is an important part of our legal duty to invest in the best financial interests of our members, so that we can pay pensions long into the future.

Examples of our stewardship activity

One of the key highlights in our report is our four overarching priority themes for our responsible investment activity – climate, governance, nature and people. We have concluded that there are four ways in which we’ll look to implement these themes – through advocacy, collaboration, integration and, of course, stewardship. We believe these themes provide a strong foundation for a much more focused approach to responsible investment.

Other key highlights include our work with the University of Exeter to further develop the four climate scenarios we use to inform our investment decision making and analysis, having made significant progress in integrating top-down implications from these scenarios into our strategic asset allocation. We’ve also increased our public advocacy and responses to regulatory consultations as evidence of our commitment to visible leadership in responsible investment. And we’ve made further progress towards our net zero ambition (more detail on this will be found in our upcoming TCFD report).

The report also includes examples of ongoing stewardship and engagement activity with a selection of our investments. For example, in line with our climate theme we’ve continued to work with Moto, a leader in motorway service areas in the UK, to encourage and support their goal to become the UK’s number one enroute electric charging destination. We are working with Moto to increase electric vehicle charging points, benefiting both customers and the wider energy transition across the UK and supporting the long-term value of the company.

We’ve also proactively engaged with BRUC Energy, a Spanish renewables platform, in relation to our climate theme, to support its progress in renewable energy generation in Spain. We worked closely with its senior management team to help achieve the ambition of making it a leader in solar and wind renewable energy in Spain.

We launched Sparrow Shared Ownership, a portfolio of energy efficient homes, following the acquisition of more than 3,000 shared ownership properties, and, in line with our governance theme, have put a strong governance process in place to seek to minimise the company’s risk in this area. We also engaged closely with PECO Pallets, a pallet rental company based in the US, to improve health and safety across its depots and office locations and work towards a zero accident culture to support our people theme. For our climate theme, we are also discussing carbon reduction targets to make sure the company is ready for a lower carbon world.

And the final example I want to touch on reflects our commitment to collaborate with other asset owners, policymakers and governments – we were one of the five pension investors leading on the Asset Owner Statement at the UN Biological Diversity Conference 2024, calling on governments to put global policy goals and targets for nature into national policy and regulation. We also joined the National Wealth Fund Taskforce in March 2024, established by the Labour Party, to shape thoughts on what the National Wealth Fund could look like, including how it could address the energy transition.

I hope this helps give you a flavour of the types of stewardship activity we’ve been working on over the past year. We’re not complacent about our approach and we’ll continue to strive for improvements. Moving forward we’ll keep working towards our ambition for our investments to be net zero by 2050, we’ll aim to increase our collaboration with other investors and stakeholders to positively influence system wide progress on issues that matter to member outcomes, and we’ll further integrate our four responsible investment priorities into investment decisions.

You can read more about our responsible investment commitment and our beliefs and ambitions in this space on our dedicated page.