Railpen has published its 2023 Stewardship Report as part of its ongoing commitment to the 2020 UK Stewardship Code.

The report outlined the progress and action taken throughout the year to address Railpen’s four thematic stewardship priorities between 2021 and 2025, including the climate transition, the worth of the workforce, responsible technology, and sustainable financial markets.

In particular, it confirmed that Railpen has escalated its stewardship activities to improve member outcomes, divesting from companies that were not making sufficient progress on issues, including governance issues, and one company with extensive and unmitigated concerns on workforce treatment.

Railpen explained that whilst it prioritises confidential and constructive engagement with companies, it reserves the right to take its concerns public, or to divest its holding entirely, if the company fails to adequately address the issues that have been raised.

In addition to this, it made a pre-declaration against a firm on governance grounds, which led to improved dialogue, and co-filing a climate lobbying resolution at a major US utilities firm.

The report also highlighted Railpen's efforts to drive broader industry change, as the group continued to advocate for robust investor protections in the UK and elsewhere, collaborating with others in the industry to enhance impact.

This included drafting and co-ordinating a public letter signed by £300bn of UK scheme assets under management, expressing concerns about the Financial Conduct Authority's consultation to change the UK listings rules.

The report also outlined Railpen's redefined approach to its environmental, social and governance (ESG) integration across most asset classes, including infrastructure, at post-and pre-investment stages and implementing its net-zero roadmap.

This included establishing key performance indicators (KPIs) for directly held infrastructure assets, as part of developing a more consistent monitoring framework, and carefully assessing a private equity manager’s investment approach and governance of ESG issues both generally and in relation to a specific fund.

Railpen Sustainable Ownership acting head, Caroline Escott, said Railpen was “pleased” to have published its latest Stewardship Report and said it recognises the “important role” that the current code has played in raising stewardship standards in the UK.

She stated: “We hope the ongoing review will not result in any undue changes and urge other long-term investors to speak up in support of the code in forthcoming consultations.

“We believe companies with robust corporate governance practices and engaged shareholders are more likely to achieve the superior long-term financial performance that our members need.

“Well-run companies are better placed to effectively manage all relevant risks and opportunities, including those related to environmental and social factors.

“By thoughtfully engaging with portfolio companies and using the full range of stewardship tools in the toolkit, it is possible to exercise positive influence and create long-term value. This helps Railpen, on the trustee’s behalf, secure our members’ futures.”

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