At Standard Life, responsible investing is first and foremost about helping your clients to achieve their retirement goals. Our priority is always to aim to give customers a good financial outcome in the long term.

This page explains the responsible investment approach for the Future Advantage risk-rated fund range.

 

Building our approach

Our Future Advantage risk-rated range uses a series of underlying building block funds for different asset classes.

Our building block funds for equity and corporate bonds are collective investments, owned and operated by Phoenix Unit Trust Managers (PUTM). PUTM has overall ownership and control, but an appointed investment manager handles the day-to-day investment management. It’s a structure that gives us flexibility, particularly because we aren't tied to any single investment manager or strategy.

The responsible investment approach in our Future Advantage funds is embedded in our equity and corporate bond building block funds.

 

Sustainability label for these equity and corporate bonds

We have incorporated the FCA’s Sustainability Disclosure Requirements (SDR) labelling regime into our Future Advantage range - through our building block funds.

These equity and corporate bond funds are aligned to the Sustainability Improvers™ label.

Responsible investment content for the Future Advantage range:

The approach is focused on growing your clients’ wealth, prioritising investment returns while aiming to avoid ESG risk.

Because our responsible investment approach is applied to equity and corporate bonds, the total amount of responsible investment in each fund will vary from 57%-91%, depending on its underlying investments. You can find the total for each fund in the relevant factsheet.

The total for the range varies from 57% - 91% and is reported in the factsheet for each fund.

Fund Responsible investment content (equity and corporate bonds)
Future Advantage 1 57%
Future Advantage 2 75%
Future Advantage 3 80%
Future Advantage 4 84%
Future Advantage 5 91%

 

Aiming to be net zero by 2050

Our Future Advantage range invests in funds that have a specific, measurable target for improvement.

The equity and corporate bond funds used in the range aim to reduce carbon footprint*:

On average by 7% each year
By 50% by 2030**
To net zero by 2050

*as measured through carbon emission intensity on a tCO2e/$m inflation-adjusted enterprise value including cash (EViC) basis. Includes scope 1 and 2 emissions. Does not include scope 3.

** compared to a 2019 baseline.

 

Enabling the journey to net zero

Our responsible investment approach for equity and corporate bonds is delivered through investments that track bespoke sustainable indices, owned by Phoenix.

In our bespoke indices, we do three things in order to achieve our net zero goal:

Exclude
We exclude companies in sectors with significant ESG risk including:

  • Controversial weapons
  • Tobacco production
  • Thermal coal and unconventional oil/gas
  • UN Global compact failure and ESG controversies
  • Companies with the lowest ESG scores

Tilt
We improve the carbon footprint of the portfolio by investing more in stocks with better: carbon performance, management quality and low carbon transition scores

Tilts are calculated based on up-to-date research, data and scores provided by the Transition Pathways Initiative and MSCI

Steward
We use engagement and proxy voting to drive positive change. The funds have a strong stewardship strategy including:

  • Net zero target – supporting the same aim as the funds themselves
  • Control over proxy votes
  • A focus list of companies targeted in high-emitting sectors
  • Alignment between Phoenix Group and asset managers, enabling high quality climate-specific engagement

 

Benefits of our index approach

  • In each fund, Phoenix Group owns the index, and we benefit from in-house expertise and experience of index oversight in the Phoenix asset management team.
  • We can review and adjust the index annually to stay on track to meet our aims.
  • Ownership of the index gives us control over both the carbon footprint and risk profile of funds as we journey towards net zero – helping to protect customer outcomes in the long-term.

 

Measuring our progress

  • Our exclusion, tilts and stewardship activities combine to reduce the carbon footprint of the fund.
  • We measure our performance every year to check that we’re achieving our aims.
  • We publish responsible investment measures in our fund factsheets, so that you can see how we’re doing.

 

Helping to drive the change

Our aim is to reach net zero by 2050. That means that we will invest in companies that may not be at net zero now, but that plan to improve their carbon footprint over time. This makes our stewardship approach an important part of the journey.

We have a dedicated in-house stewardship team, and our external investment managers also carry out stewardship for us. Our stewardship strategy for these funds is specifically designed to support our net zero aim, and we focus on the companies with the biggest carbon footprint.

Our strategy includes a plan for escalation when engaging with companies isn’t working. As a last resort, we can decrease exposure and ultimately divest the holdings.

 

How we use terms

We know that responsible investment terms can be used differently by different providers. To be clear on what we mean at Standard Life, we provide the following definitions:

  • Responsible investing - a strategy and practice to incorporate environmental, social and governance (ESG) factors in investment decisions and stewardship
  • Sustainable investing - investing with the stated intention of achieving positive sustainability outcomes alongside financial returns

Money invested is at risk. Tax may change in the future.

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