Sustainable Ownership blogs

<p><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">It might sound strange, but the costs associated with climate change can have a significant impact on companies and the financial markets.</span><br></p><p>This in turn means it can affect the assets of a pension scheme like ours. And ultimately affect the value of your savings, especially if you’re an <a href="https://member.railwayspensions.co.uk/in-the-scheme/paying-into-iwdc" data-sf-ec-immutable="">IWDC member</a> or pay <a href="/defined-benefit-members/saving-more-BRASS-AVC-Extra">Additional Voluntary Contributions (AVCs)</a>. </p><p>So what are we doing about it?<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></p><h3><strong>Our role in combating climate change</strong><span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></h3><p>We understand that the large-scale financial industry has a responsibility, not only to protect members’ savings and investments. But also to play its part in tackling the impact of climate change on the world in general. </p><p>With this in mind, the scheme’s investment manager, <a href="https://www.railpen.com/investing/" data-sf-ec-immutable="">RPMI Railpen</a>, has long considered climate change in its investment decisions on behalf of our Trustees.</p><p>This includes:</p><ul><li>sourcing low carbon investment opportunities </li><li>encouraging the companies we invest in to act on climate change and </li><li>withdrawing investment on climate grounds where necessary </li></ul><p>As one of the UK’s largest pension schemes, we also work directly with policymakers and the wider industry to create a regulatory framework which supports the transition to a net zero world.</p><p><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: var(--font-size-h3); text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Our work on climate change to date</strong></p><p><strong></strong>In 2019, RPMI Railpen formally committed to voting in Annual General Meetings (AGMs) against any companies that were believed to lack robust oversight of climate change at management level. </p><p>Earlier this year the policy was expanded to include voting against companies in key climate-affected sectors that do not make the impact of climate change clear in their financial accounts.</p><p>It’s the latest in a series of steps RPMI Railpen have taken on behalf of the Trustees, which recognise the importance of climate change and its impact on your savings. Others can be found in the timeline below.</p><img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/sustainable-ownership-investments_graphic-v2.jpg?sfvrsn=5e657a93_1" alt="A list of our climate change actions by year "><h3><strong></strong><strong>Plans on climate change moving forward</strong></h3><p>RPMI Railpen recently published its first Climate-Related Disclosure explaining its work on climate change and our plans for the future. This will be updated every year to reflect the fast moving nature of climate change. You can read it in full <a href="https://www.railpen.com/knowledge-hub/reports/climate-related-disclosure-2020/" data-sf-ec-immutable="">here</a>. </p><p>We’ve also set up a cross-team Climate Working Group, chaired by Railpen’s Chief Investment Officer, Richard Williams, to look at how we can play our part in helping the UK achieve its ambition to bring greenhouse gas emissions to net zero by 2050.<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></p><p>We are actively involved in the Government’s Pensions Climate Risk Industry Group (PCRIG), which supports the pensions industry in responding to climate change and aims to raise standards of climate-aware investment.<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></p><p>And we will continue to use our voice, alongside those of other investors, to publicly call for positive corporate action on climate change and to apply positive influence on the companies we invest in.<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></p><p>We also hope that the UK hosting the 26th UN Climate Change Conference (UKCOP26)&nbsp;later this year will provide more opportunities to discuss the impact of climate change, not only on your pension but on the world you will retire into.</p><h3><strong>Find out more about our approach to climate change</strong><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></strong></h3><p>If this blog has piqued your interest, you can read more about the Trustees’ and Railpen’s approach to protecting members’ futures, including our work on climate change and other environmental, social and governance factors (ESG) in the Stewardship Report <a href="https://www.railpen.com/knowledge-hub/reports/stewardship-report-2022/" data-sf-ec-immutable="" data-sf-marked="">here</a>.<span style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto"></span></p>

<p>You will see how and why it all works, where your contributions are invested and how your money grows.</p><h2>The Trustee</h2>The funds from your Railways Pension Scheme contributions are carefully managed by a group of employer and elected member representatives, known as “The Trustee”. The Trustee’s job – along with the help of our team of pensions and investment specialists - is to regularly check that the Scheme administration and financial investments are doing well and to keep you informed.&nbsp;<br><br><h2>Our financial experts&nbsp;</h2>The Trustee works closely with our team of pensions and investment experts. Together, their responsibility is to pay your pension securely, affordably and sustainably. With their combined professional knowledge and financial market insight, this team makes careful and informed decisions on where to invest your money, so that your pension pot grows and you receive the benefits you were promised. These investment and financial specialists are known as the Scheme’s “investment manager” or <a href="https://www.railpen.com" target="_blank" data-sf-ec-immutable="" data-sf-marked="">RPMI Railpen</a>. <p><br>The Trustee and Investment Manager invest members’ pension contributions into a range of assets including shares, bonds and property. Investing widely like this helps to limit risk and this diverse approach also gives your retirement savings the best possible chance of increasing in value over the years.<br></p><h2>How your pension contributions are invested&nbsp;</h2><span style="background-color: initial; font-size: inherit; font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Your pension contributions are combined into “pooled” or collective investment funds. This means your money immediately benefits from economies of scale and the team can choose from a wider, more valuable range of investments.</span><br><p><br><span style="background-color: initial; font-size: inherit; font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; caret-color: auto">Our investment team uses these funds to meet the specific needs of over 100 individual Sections within the Railways Pensions Scheme.&nbsp;</span></p><div>If your money was only held in cash savings, inflation could reduce its value, whereas investing gives your pension a much better chance to grow, whilst also helping the organisations your funds are supporting. The idea is that as these organisations grow, so too does the value of your pension.<br><br></div><div>Every Section has its own specific requirements, so we work with each Section and its representatives, to create the most suitable investment strategy for them.&nbsp;<br><br></div><div>To guide all their decisions, the team follows firm investment beliefs and principles on valuation, risk, diversification, costs and ESG (environmental, social and governance) factors.<br><br></div><div>While we are researching investments, we look at how companies behave. Do they operate honestly and fairly? Do they care for the environment and the communities they serve and operate in?&nbsp; We examine our potential investments carefully as we believe that sustainable, ethical organisations have sustainable futures. These are the organisations that will grow and last and we want to be part of them.&nbsp;<br><br></div><div>How these organisations use the money they receive from pension investors like you, via the Railway Pensions Scheme and RPMI Railpen, can make a big difference on behalf of us all, to the future of the world.&nbsp;</div><br><h2>Some examples of our recent investments&nbsp;<br><br></h2><ul><li>In 2017, we invested in Gigaclear, a company dedicated to building and operating ultrafast, pure fibre-to-the-premises broadband networks in rural Britain<br><br></li><li>In 2020, we purchased the majority interest in an onshore wind farm in Scotland, Carraig Gheal Wind Farm.&nbsp; This investment is expected to generate renewable energy over the next 30 years and help the decarbonisation of the UK energy supply<br><br></li><li>In 2021, we invested in MIPS, a company that makes a patented Brain Protection System for helmets that mimics the brain’s own protection system, offering a scientifically-proven element and much better protection than current products<br><br></li><li>In 2020, we co-invested in Sleaford Renewable Energy Plant, a biomass facility in Lincolnshire.&nbsp; The plant has been operational since 2014 and converts local straw into heat and energy, as a renewable source of power<br><br></li><li>In 2021, we invested in Lonza Group, a leading manufacturer of products and services to the biopharma and consumer health industries. Lonza offers direct exposure to the growth of tomorrow’s drugs<br><br></li></ul><p>We have been paying members’ pensions securely, affordably and sustainably for over 50 years.&nbsp; To achieve this, we continue to invest the Scheme’s assets to generate strong investment returns over the long term.&nbsp; <br><br>You are in very good hands.</p><p>&nbsp;</p><p>&nbsp;</p>