Standard Life Investments UK Equity Impact Policy
Standard Life Investments recognises that the world faces a number of significant environmental and social challenges. The United Nations has set out a broad-reaching plan of action for people and their prosperity seeking to address these challenges. It has done this through the launching of the Sustainable Development Goals (SDGs), which outline the world’s sustainability agenda for 2030. One of these goals, SDG 8, focuses on promoting inclusive and sustainable economic growth, full and productive employment and decent work for all. Decent work is fundamental to all aspects of personal and social well-being. As such, it is the primary focus for the UK Equity Impact- Employment Opportunities Fund (the Fund).
The Fund’s impact focus:
Creating good employment opportunities is one of the most significant benefits business brings to society. Companies which have demonstrated that human capital management is a key tenet of their corporate strategy by investing in their employees, developing their skills and attracting new talent will gain competitive advantage, increase productivity and growth.
The aim of the Fund is to generate a financial return over the long term by investing in companies which promote and implement good employment opportunities and practises. The Fund’s manager will identify companies for their potential to grow and sustain strong long-term financial returns. Companies will then be assessed to determine if they are committed to delivering sustainable employment opportunities.
The Fund’s approach to investment:
The investable universe for the Fund focuses primarily on the “buy” and “hold” rated stocks that have been analysed by the UK Equity Team. The fund will focus on companies with at least 50% of their workforce in the UK.
A special Employment Opportunities Impact Assessment Framework underpins the strategy, guiding portfolio selection and ensuring that it meets its positive impact objective. To identify these companies for inclusion in the Fund a framework is used to analyse and rate them based on the ability to contribute towards four areas of sustainable and quality employment opportunities:
- Job growth in absolute and relative terms
- Company average wage versus sector median
- Living wage employer
- Training and career development
- Employment opportunities for young people, such as apprentice schemes
- Gender equality
- Level of economic deprivation of employment areas
Each potential investment is assessed for impact using company level and sector level data and will be scored based on the above 4 pillars, weighting the portfolio towards those companies best placed to make a positive contribution to SDG 8’s aim of “full and productive employment and decent work for all”.
While the focus of the Fund is on employment opportunities, the manager of the Fund will be mindful when investing in companies whose activities, products and services may not be deemed to be aligned to, or are incongruous with, the other SDGs.
The Fund has an active engagement policy. This allows the analysts and managers to engage with the companies, questioning their ability to deliver financial returns as well as ensuring that the identified employment impact remains a significant part of the strategy and aims. The active engagement approach enables the analysts and managers to learn more about a company’s sustainability strategy and impact, appraise company management, encourage best practice, exchange views and encourage companies to maintain the identified impact strategy. An active engagement approach is essential element to of the fund’s strategy to achieve impact through pushing for change.