Environmental, social and governance investing

Recent years have seen more focus on how investors’ money works in a sustainable way. This is commonly referred to as Environmental, Social and Governance (ESG) investing.

What is ESG investing

ESG investing sees fund managers consider non-financial factors alongside the more traditional financial measures to build a picture of how a company makes a positive contribution. This could be to the environment, such as climate change, to society, such as working standards, or governance, such as executive pay. The aim is to foster positive change through the companies that a fund manager invests in on behalf of its customers. 

NFU Mutual’s ESG investment approach 

  • At NFU Mutual we take a responsible and integrated approach to ESG investing. This means that we incorporate ESG considerations directly into our investment process. We believe that by building and maintaining well-diversified portfolios of quality companies, we can target long-term investment growth and sustainability. This in turn drives good returns for our customers and positive outcomes for all stakeholders.
  • We look to invest in companies that offer fundamentally sustainable investment opportunities and believe that non-financial measures can be as important as more traditional financial measures.
  • We do not dismiss opportunities to engage with companies based on their overall strategic direction or exclude ‘non-green’ sectors such as oil. Instead, we believe that engaging with companies and holding them to account can be a more effective contribution. Through investment and incentivisation, we are in a position to influence the direction of companies to make positive sustainable change.
  • We are transparent about where we have made ESG considerations and engaged with companies to further their sustainability credentials.
  • Our fund managers use a mixture of internal and external research when considering an investee company and frequently meet with management teams or their representatives to ensure that their interests are aligned with our own and that we are comfortable the company has a strong culture.
  • We may decide to avoid companies and sectors which we deem to be the most harmful to society. Following the invasion of Ukraine, we announced our commitment to divest from all Russian holdings as soon as practically possible.
  • Our fund managers are dedicated to investing our customers money in a sustainable and responsible way. In February 2022, we became signatories to the Principles for Responsible Investment (PRI). Supported by the United Nations, the PRI is an independent international network of investors working together to achieve six aspirations designed to develop a more sustainable global financial system.
  • We extend our responsibilities into our shareholder engagement and voting decisions. Throughout 2022, our fund managers voted at 6,625 meetings on 66,884 resolutions, of which there were 11,141 votes against management.

To summarise, it’s our responsibility to invest our customers’ money carefully and we believe an integrated approach to ESG enables us to invest more freely and affect positive change.

Learn more about our approach to responsible investment in our Stewardship Code Report.