Statement of Investment Principals 30 September 2019 - Flipbook - Page 8
6 Responsible Investing, Governance and Engagement
The Trustee recognises that Environmental, Social and Governance (ESG) issues can and
will have a material impact on the companies, governments and other organisations that
issue or otherwise support the assets in which the Scheme invests. In turn, ESG issues can
be expected to have a material financial impact on the returns provided by those assets.
The Trustee delegates responsibility for day-to-day decisions on the selection of
investments to the Investment Managers. The Trustee has an expectation that the
Investment Managers will consider ESG issues in selecting investments, or will otherwise
engage with the issuers of the Scheme’s underlying holdings on such matters in a way that
is expected to improve the long-term return on the associated assets.
The Trustee does not currently impose any specific restrictions on the Investment
Managers with regard to ESG issues, but will review this position from time to time. The
Trustee receives information from the Investment Managers on their approach to selecting
investments and engaging with issuers with reference to ESG issues.
With regard to the specific risk to the performance of the Scheme’s investments associated
with the impact of climate change, the Trustee takes the view that this falls within its
general approach to ESG issues. The Trustee regards the potential impact of climate
change on the Scheme’s assets as a longer term risk and likely to be less material in the
context of the short to medium term development of the Scheme’s funding position than
other risks. The Trustee will continue to monitor market developments in this area with its
The Scheme is comprised of a diverse membership, expected to hold a broad range of
views on ethical, political, social, environmental, and quality of life issues. The Trustee
therefore does not explicitly seek to reflect any specific views through the implementation
of the investment strategy.
Responsibility for engagement with the issuers of the Scheme’s underlying investment
holdings and the use of voting rights is delegated to the Investment Managers. The
Trustee can therefore only influence engagement and voting policy indirectly.
The Investment Managers provide, on request, information to the Trustee on their actions
in relation to engagement and use of voting rights. The Trustee is therefore aware of the
policies adopted by the Investment Managers.
Responsibility for monitoring the make up and development of the capital structure of
investee companies is delegated to the Investment Managers. The Trustee expects the
extent to which the Investment Managers monitor capital structure to be appropriate to
the nature of the mandate.