Railpen, one of the largest pension funds in the UK, has released its 2022 member-dedicated sustainable ownership review which shows fair treatment of workers, climate change and fair pay as top concerns for its members.
The report follows Railpen’s annual stewardship report published in May and is intended to feedback directly to members on the work that Railpen has been conducting as sustainable, proactive asset owners on their behalf.
To understand what to include within ongoing member communications, Railpen asked members over 2021 and 2022 what areas they were most concerned about when it came to sustainable ownership.
The top three concerns raised by members were fair treatment of workers, climate change and fair pay.
Fair treatment of workers
To address concerns over fair treatment of workers, over the last year, Railpen said that together with a major investor and company bodies it provided good practice examples on workforce reporting from UK companies. This, it said, gave Railpen’s portfolio companies something concrete they could take inspiration from.
It also gave companies and investors guidance on how to listen to workforce and worker voices. This included support for companies on when and how to appoint employees to their board.
Railpen also joined the UK government’s Taskforce on Social Factors (TSF) to help produce guidance for pension schemes on considering social issues such as workforce treatment in their investment strategies.
To address climate change concerns, Railpen said it took a few different actions. This included using its voting rights at company’s annual general meetings (AGM), speaking to a company or helping to shape policies and laws.
It also included using some of the formal, legal processes at company AGMs such as filling a shareholder resolution to “create a bit of noise” on an issue and really “grab a company’s attention”.
Railpen said it has the right to vote on various matters relating to the management and policies of many of the companies it is invested in. This includes supporting, or refusing to support, a company’s remuneration approach.
It said that excessive pay and rewards of top managers “are not right” if they are not proportionate.
It continued: “We don’t think it’s fair if executive pay is out of line with how the rest of a company’s employees are rewarded. This includes where senior executives are getting a pension that is much better than those of other employees.”
As a result, Railpen said it voted against the remuneration report, in a public display of its concerns.
Christine Kernoghan, chair of The Railway Pensions Trustee Company, said: “The trustee’s mission is to pay members’ benefits securely, affordably, and sustainably. As part of this, it is important to understand what our members care about, and to be able to regularly report back to them on how we are considering these topics.”
She added: “This report demonstrates our continued commitment to investing responsibly, to be active stewards, and to hold ourselves accountable.”