What is responsible investing?
Responsible investing means considering environmental, social and governance (ESG) risks and opportunities when deciding where to invest money. For more definitions, see our responsible investment jargon buster.
Why invest responsibly?
At Standard Life, responsible investing is first and foremost about helping you to achieve your retirement goals.
Our priority is always to aim to give you a good financial outcome in the long term. We believe that considering ESG risks and opportunities can lead to better long-term financial outcomes.
What this approach applies to
There are different ways to invest responsibly. Here we explain the approach we use for the following ranges:
- Sustainable Multi Asset
- Future Advantage
- Investment Pathways
We don’t use this strategy for all the investments in each fund. That’s because some investment types are more difficult to class as responsible – for example cash. We use this strategy for equities (shares in companies) and corporate bonds. You can find out more in the table at the end of this page.
Aiming to be net zero by 2050
To help manage some of the financial risks that come with climate change, our Sustainable Multi Asset, Future Advantage and Investment Pathways ranges invest in funds that aim to reduce their carbon footprint*:
On average by 7% each year
By 50% by 2030**
To net zero by 2050
id
*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.
As part of Phoenix Group, we’re on a journey to becoming net zero by 2050. Find out how we’ll continue to support a better financial future for our customers, while considering our investment in carbon-emitting sectors, in our Net Zero Transition Plan. Standard Life is part of Phoenix Group and the data shown is for the combined Phoenix Group.
Enabling the journey to net zero
We use three responsible investing approaches in these funds to work towards our net zero goal:
| Exclusions Aiming to avoid significant ESG risks We don't invest in companies that we believe present long-term financial risks, including companies involved in, or with over a certain amount of revenue from:
|
Tilts |
Stewardship Using our influence to encourage companies to do better We use our power as investors to encourage companies to improve through shareholder votes and engagement |
Measuring our progress
- Our exclusion, tilts and stewardship activities combine to reduce the carbon footprint of the funds.
- We measure our performance every year to check that we’re achieving our aim.
- 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 (how we engage with and influence the companies we invest in on your behalf) an important part of the journey.
We have a dedicated inhouse 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 when engaging with companies isn’t working. As a last resort, we can stop investing in companies that do not respond to engagement.
Level of responsible investment content
The amount of responsible investment content varies depending on which fund you’re invested in. Check your fund factsheet for specific details.
As a guide:
| Investment | Potential responsible investment content |
|---|---|
| Sustainable Multi Asset | 75-100% |
| Future Advantage | 50-100% |
| Investment Pathways | Option 1, 3, and 4: 35-80% Option 2*: 0% |
*This fund includes investment types that do not use a responsible investment approach
Explaining the terms we use
What is net zero?
- Net zero is a state where we no longer add to the total amount of greenhouse gases in the atmosphere.
- Emissions output is balanced with removal of carbon from the atmosphere.
- It involves organisations, individuals and countries taking steps to reduce their emissions in a sustainable manner.
- If we achieve this collectively, we can deliver the longer-term goals to stop global warming and, by doing so, limiting potential financial risks to investors.
Carbon footprint explained
A carbon footprint is the total greenhouse gas (GHG) emissions caused by an individual, event, organisation, service, place or product, expressed as carbon dioxide equivalent (CO2e).
Greenhouse gas emissions are categorised into three groups or ‘scopes’:
Scope 1: emissions that a company makes directly, for example from running its boilers and company cars.
Scope 2: emissions that a company makes indirectly, for example from the electricity it uses to power its buildings. Essentially, these emissions are being produced on the company’s behalf.
Scope 3: includes 15 other types of emissions that might be linked to a company but not directly – for example, from its supply chain and from its products when customers use them. In our case Scope 3 also includes emissions from our investment portfolio.