Phoenix Group, the largest long-term savings and retirement business in the UK, published a letter sent to its asset management partners, outlining the firm’s expectations for the managers on issues including ESG integration, portfolio decarbonization and stewardship activities.
The letter includes a request for support from partners to help Phoenix achieve its net zero emissions investment goals. Late last year, the company announced a series of sustainability commitments including targets to achieve net zero carbon emissions in its operations by 2025, and in its investment portfolio by 2050.
Mike Eakins, Chief Investment Officer at Phoenix Group said:
“We believe it’s important for our customers, clients and their advisers for Phoenix to be at the forefront of the transition to net zero for investment portfolios, and we will be working closely with our investment partners and our wider community on this journey.”
In the letter, Phoenix highlights its efforts to increase the integration of ESG considerations into the investment process, and to increase the share of sustainable investments in its portfolios. The company also stresses the importance of stewardship efforts through engagement in order to drive better corporate behaviors.
To support these goals, Phoenix stated that it will only partner with investment organisations that are similarly committed to achieving positive change, and expressed a series of expectations for its asset management partners. The expectations include requirements by asset managers to fully embed responsible investment practices in their investment decision-making, risk-management and governance processes, with periodic reporting including data on climate and ESG metrics. On the climate front, Phoenix strongly encourages managers to set their own net zero commitments, and to provide disclosures in line with TCFD recommendations.
Phoenix’ stewardship requirements for asset managers include exercising voting rights on behalf of shareholders, engaging with portfolio companies to drive performance and to provide disclosure on ESG and climate issues, and for the managers to report on their stewardship activities and outcomes.
Phoenix also expects asset managers to be signatories of the Principles for Responsible Investment (PRI), and to applicable stewardship codes.
In the letter, Eakins said:
“Sustainability plays a greater role when we evaluate investment partner capability. We consider this as being fundamental to our relationships with our asset management partners.
“When selecting/reviewing asset management partners or investing in illiquid assets, we only seek to partner with organisations that demonstrate a high degree of ESG competency across all areas of our commitment as described above. As you would expect, in line with good governance, if any of our asset management partners fail to adhere to our minimum requirements they will be put on notice to improve within agreed timelines and on the understanding that both a cessation of new investments or, in extreme cases, a termination of the mandate may be required should they fail to improve as agreed.”
Click here to read the full letter.