Our approach to responsible investing
The NUKPF Trustees approach to responsible investing
We – the Fund’s Trustees – have developed a set of investment beliefs. These beliefs help us make focused and effective investment decisions. Our investment strategy and objectives reflect these beliefs.
Read more about our investment beliefs in the Statements of Investment Principles
The Fund has defined benefit (DB) and defined contribution (DC) sections and the Trustees’ investment objectives for each section are slightly different:
DB section objective
For the DB sections (DB Core and DB CorePlus) the aim is to ensure the Fund has enough money to pay all the benefits it has promised to members.
DC section objectives
For the DC sections (DC Start and DC Core) the aim is to ensure that members’ DC accounts have the chance to grow in value over the long term.
With input from our investment advisers, we set and monitor the investment strategies for the DB and DC sections to achieve these objectives. We then appoint appropriate investment managers to manage the investment of the DB and DC assets on a day-to-day basis.
When we choose these investment managers, we take a lot of factors into account. This includes the way in which ESG factors could affect the overall investment performance.
As Trustees, we believe that ESG factors can have a positive impact on investment returns. And we believe that incorporating these factors into our investment decision-making and practices will lead to better informed decision-making relating to our investments.
We believe that change is better influenced through ownership and engagement with the companies in which the Fund is invested. We therefore prefer engagement over disinvestment when considering good stewardship of our investments. This means that where voting rights are held (e.g. through the ownership of shares), these rights should be exercised where appropriate.
We have delegated the execution of voting and engagement activity to the Fund’s asset managers. Such managers are expected to vote at company meetings (for example, Annual General Meetings – AGMs) and to engage with companies on our behalf in relation to ESG considerations and other relevant matters (such as the companies’ performance, strategy, risks, capital structure, and management of conflicts of interest).
We expect fund managers without voting rights to engage with companies on issues that are material to the performance of the asset.
We don’t have a policy of excluding particular companies or sectors on ESG grounds (or for any non-financial reasons), although we will look to exclude or divest from companies or sectors where we feel engagement has not had the desired effect – although this is very much a last resort and needs to be consistent with our fiduciary duties.
Two of our responsible investment beliefs are that:
- “Climate change risk in particular represents a long-term material financial risk for the Fund…”, and
- “Achieving alignment with the goals of the Paris Agreement* is likely to be in the long-term financial interests of the Fund and its members and the Trustees will incorporate consideration of this goal into strategic decision making.”
*The 2015 Paris Agreement is an international treaty on climate change. Its goal is to substantially reduce global greenhouse gas emissions and to limit the global temperature increase in this century to 2 degrees Celsius while pursuing means to limit the increase even further to 1.5 degrees, compared to pre-industrial levels. You can read more about this at https://www.un.org/en/climatechange/paris-agreement