Responsible Investment

Stewardship, engagement and remuneration policy

Standard Life International dac is part of the Phoenix Group, the UK’s largest long-term savings and retirement business. As an insurer and long term global investor, we have a duty of care to act in the best interests of all of our customers, shareholders and stakeholders. Our approach to stewardship and engagement is based on the European Union’s Shareholder Rights Directive II (EU SRD II), which came into force in June 2019.

It's also in line with our current philosophy on responsible investment, but we review and refresh our approach regularly.

One of the aims of the SRD II directive is to promote effective stewardship and long-term investment decision-making in regulated financial services companies. This is supported by the promotion of greater shareholder involvement in the corporate governance of public companies to ensure that decisions are made for the long-term stability of a company and take into account environmental and social issues.

How we implement the policy

We offer a wide range of funds to our customers that are managed by external asset managers who set the investment strategy and guidelines for these products. We don’t have any input into these.
It’s important to us that these managers take their stewardship responsibilities seriously and influence the companies they invest in where appropriate.

We delegate the responsibility for integrating shareholder engagement in the investment management process and making any necessary decisions to the asset managers we’ve outsourced to. We take into account the capability of asset managers to vote on our behalf as part of the manager selection process, and this is also formally delegated to them in the contract between them and us.
Although we outsource investment management to a number of asset managers, Aberdeen Standard Investments is our largest strategic partner. They’re committed to good stewardship.
You can find information about their engagement and voting policies here:

https://www.aberdeenstandard.com/en/ireland/responsible-investing

Their conflicts of interest policy is also available on their website:

https://www.aberdeenstandard.com/en/who-we-are/policies-and-governance

You can find out more about the engagement and voting activity of our other external managers on their websites.
Below is the link to Vanguard Asset Management, who is responsible for managing our range of index-tracking funds:

https://about.vanguard.com/investment-stewardship/

As a long term asset owner we at Phoenix act on behalf of our policy holders and shareholders to invest responsibly. We are committed to factoring ESG matters into our investment decision making process. We will play a vital role in decarbonising the capital markets and financing the transition to a sustainable low carbon economy. Standard Life International as part of Phoenix Group will comply with the investment philosophy and process being developed.

Our Areas of Focus

Strategy and Governance

We will work with our best-in-class asset management partners to deliver our customers and stakeholders’ expectations. We will increase investment in assets that support a sustainable world, aligned with the UN SDGs, within the shareholder and policyholder business.
In 2020 we became a signatory to the United Nations- Supported Principles of Responsible Investment (‘UN PRI’). This demonstrates the Group’s commitment to including ESG factors in investment decision making and ownership. The UN PRI is the world’s leading proponent of Responsible Investment. It works to understand the investment implications of ESG factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions.

The governance for the development, implementation and monitoring of our Responsible Investment philosophy is managed by the Investment Committee. Our Investment Philosophy will be refreshed at least annually or more frequently if required. In order to allow a sufficient level of attention to Responsible Investment, a separate management committee to review ESG-related risks and opportunities across all portfolios is in place. This working group reports to the Investment Committee and the Group Board Sustainability Committee.

Within our Life Company websites we provide further information to customers on how we incorporate environmental, social and governance (ESG) factors into investments processes.

Integrated ESG Management

We will continue to review and enhance ESG integration within our investment processes. We will embed best-in-class data analytics and capability to support us in this process.
We work with a network of asset management partners, all of whom are signatures to UN PRI and UK Stewardship Code. Initial due diligence as well as ongoing monitoring is vital to ensure that assets are managed in line with the Group’s philosophy and expectations. We require all our asset management partners to implement our approach to Responsible Investment and to integrate ESG considerations into their investment processes.

We have a dedicated and experienced team to undertake asset manager assessments. We have appointed external consultants to support us with the selection and monitoring of our asset management partners’ RI processes. We are committed to continue and deepen this work ourselves.
As part of this assessment, we issue formal requests to enable us to gather necessary information. We not only review the policies and frameworks of the asset management partners, but equally, assess the factors affecting implementation. These findings are then presented to our governance committees. Partners who fail to meet our minimum requirements will be put on notice to improve within agreed timelines or cessation or termination of mandate may occur.

Stewardship

Active stewardship is critical to the delivery of our ambitions, and to meet our net-zero commitment. As a large asset owner, we recognise our stewardship responsibilities and will adopt an “engagement first” approach with the objective of using our position of influence to bring about change. Inaction post sustained engagement will, however, ultimately lead to disinvestment.

For funds and portfolios where we set the investment strategy and guidelines we delegate to our asset management partners the responsibility for integrating shareholder engagement in the investment management and decision making processes. We take into account the capability of asset managers to vote on our behalf as part of the manager selection process, and this is also formally delegated to them in the contract between them and us.
The delegated Stewardship responsibilities include:

  • Monitoring resolutions and making sure that voting rights are carried out in line with investment objectives
  • Engaging with companies they invest in and monitoring the investee companies on relevant matters
  • Capital structure
  • Social and environmental impact and corporate governance
  • Escalating activities to the management of companies they invest in as necessary
  • Acting collectively with other investors and shareholders, including communicating with those where relevant or necessary.

Stewardship in Action

Our asset management partners on our behalf strive to use our influence as significant investors to achieve progress. In instances where our standards have not been met, divestment is both appropriate as responsible stewards of our clients’ capital and aligned to our goal of investing for better outcomes. Examples of where our asset managers have put stewardship into action include:

Boohoo Group plc is a UK-based online fashion retailer. Our asset management partner, Aberdeen Standard Investments (ASI), divested from Boohoo from our responsible investment funds in response to allegations of slavery and poor conditions within the company’s supply chain. Having spoken to Boohoo’s management team a number of times our asset manager was of the view that their response was inadequate in scope, timeliness and gravity which led to this decision.

Decarbonising our investment portfolio

We are committed to decarbonising our investment portfolio and achieving net zero GHG emissions by 2050. To do this we will actively engage with decarbonisation alliances, initiatives and policy makers. In addition, we will enhance our internal capability by acquiring and developing tools to perform portfolio analysis using best in class metrics, taking into account both physical and transitional risks. This is consistent with the objective of limiting the temperature rise to no more than 1.5°C above pre-industrial temperatures and is in line with the Paris Agreement and the commitment of the UK Government. We recognise that there are many considerations in delivering this target and out immediate focus is on our equity and liquid credit portfolios.
For more information on how we Foster Responsible Investing please view our Phoenix Group Sustainability Report

Phoenix Group Remuneration Policy

Sustainability is at the heart of our business as a key strategic priority. We align our performance goals to our Phoenix one team goals. Our targets are closely aligned to these goals of being a customer obsessed, purpose led organisation led by a diverse and talented workforce all connected by common values.

A reward framework, remuneration policy and best practice is established and regularly reviewed by the Remuneration Committee against a board approved terms of reference. Remuneration must be competitive enough to motivate, retain and attract quality staff.

Our Annual Incentive Plan performance measures are based on the achievement of strategic (including sustainability), personal and business performance goals. Long term Incentive Plans are also offered to business and executive leadership over a 3-5 year outlook. This helps us to be the “best place our colleagues have ever worked” which is core to achieving our sustainability aspirations.