Pension funds see impact from stewardship efforts
Stewardship has moved beyond voting statistics, focusing on whether engagement shapes real-world outcomes across climate, people, governance, and systems-level risks. Royal London Asset Management’s Stewardship and Responsible Investment Report 2025 provides insight into where stewardship is delivering traction and where long-term risks remain underpriced.
A decade after the Paris Agreement, climate change is now a core business risk. Royal London Asset Management’s stewardship focus in 2025 reflected this shift from ambition to execution, engaging companies responsible for over half of their financed emissions.
While some companies strengthened disclosure and near-term targets, overall progress remained mixed. Political uncertainty and policy volatility are increasingly influencing corporate decision-making, slowing alignment in some sectors.
The Net Zero Stewardship Programme assessed whether transition plans translate into capital allocation, incentive structures, and real emissions reductions. However, delayed or poorly governed transitions increase stranded-asset and volatility risks across portfolios.
A defining feature of Royal London Asset Management’s stewardship work is the integration of just transition into climate engagement. Since 2019, they have assessed how companies consider workers, communities, and customers as part of the transition.
In 2025, this included collaborative engagement with UK banks, examining how lending, product design, and regional strategies support a fair transition. Progress was strongest in sustainable finance and product innovation, but place-based and community impacts remain underdeveloped.
Climate transitions that overlook social impacts risk political backlash, regulatory intervention, and operational disruption, ultimately affecting long-term returns.
The clearest shift in stewardship is the move towards holistic, interconnected thinking when engaging on issues. Climate, nature, and people are converging, and siloed sustainability strategies may no longer be credible.
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Royal London Asset Management deepened work on the climate–nature nexus, biodiversity, and just adaptation, engaging companies exposed to physical climate risks, land use, and supply-chain disruption.
Systemic risks do not stay contained within asset classes or sectors. Stewardship that recognizes interconnections is essential for long-term portfolio resilience.
The increasing complexity of these issues demands a more thoughtful approach to stewardship, one that acknowledges the relationships between climate, nature, and human societies. This perspective is essential for pension investors seeking to protect long-term outcomes in a climate action context.
Voting is no longer a backstop – it is an active escalation tool. Royal London Asset Management voted at over 4,000 meetings globally and escalated on issues including climate oversight, executive pay, board accountability, and workplace culture.
Stewardship that links engagement and voting is critical for protecting long-term value.
For pension investors, several conclusions stand out: stewardship outcomes matter more than activity metrics, social and governance risks are now financially material transition risks, and collaborative engagement can move markets – but only with clear expectations.
Voting remains a critical escalation lever, and long-term value demands holistic, interconnected thinking. Stewardship is no longer optional – it is a fundamental tool for protecting and enhancing long-term outcomes.
Pension schemes can benefit from Royal London Asset Management’s experience, recognizing that voting, engagement, research, and advocacy help shape outcomes and support better corporate practices. However, voting and engagements may not always apply to a specific Royal London Asset Management fund or strategy, as each will have different investment objectives.
