• Atmospheric CO2 /Parts per Million /Annual Averages /Data Source: noaa.gov

  • 1980338.91ppm

  • 1981340.11ppm

  • 1982340.86ppm

  • 1983342.53ppm

  • 1984344.07ppm

  • 1985345.54ppm

  • 1986346.97ppm

  • 1987348.68ppm

  • 1988351.16ppm

  • 1989352.78ppm

  • 1990354.05ppm

  • 1991355.39ppm

  • 1992356.1ppm

  • 1993356.83ppm

  • 1994358.33ppm

  • 1995360.18ppm

  • 1996361.93ppm

  • 1997363.04ppm

  • 1998365.7ppm

  • 1999367.8ppm

  • 2000368.97ppm

  • 2001370.57ppm

  • 2002372.59ppm

  • 2003375.14ppm

  • 2004376.96ppm

  • 2005378.97ppm

  • 2006381.13ppm

  • 2007382.9ppm

  • 2008385.01ppm

  • 2009386.5ppm

  • 2010388.76ppm

  • 2011390.63ppm

  • 2012392.65ppm

  • 2013395.39ppm

  • 2014397.34ppm

  • 2015399.65ppm

  • 2016403.09ppm

  • 2017405.22ppm

  • 2018407.62ppm

  • 2019410.07ppm

  • 2020412.44ppm

  • 2021414.72ppm

  • 2022418.56ppm

  • 2023421.08ppm

Caroline Escott: 'We look at the most material net zero issues from both a top-down and bottom-up perspective'
News & Views

PLSA exclusive: ‘Careful with companies where there is value at risk’, says Railpen’s stewardship head

In an exclusive interview with NZI, Railpen's Caroline Escott talks stewardship, engagement and pension funds' role in driving net zero investments

Content Tags: Pensions  Engagement  Transition  Stewardship  UK 

As Britain's pension fund community is making its way north for the investment conference of the Pensions and Lifetime Savings Association (PLSA), kicking off in Edinburgh tomorrow, Net Zero Investor caught up with a key player ahead of this week's event.

A senior investment manager, Caroline Escott is head of stewardship at Railpen, one of the UK's largest and longest established pension funds, representing more than 350,000 members around the country.

In an exclusive interview with NZI, Escott opens up about engagement efforts, active stewardship and the role pension funds should play in driving and influencing the net zero investment agenda.

The London-based strategist was previously in charge of the investment, stewardship and collective engagement programme at the PLSA and, prior to this, Escott was head of public policy at the UK Sustainable Investment and Finance Association (UKSIF).

Tomorrow PLSA's investment conference kicks off in Scotland, with engagement and active stewardship among some of the hottest topics at this week's event. How does Railpen find the right balance when it comes to steering your investment portfolio?

Constructive, thoughtful engagement with portfolio companies supports our objective to enhance the long-term investment returns for our members. We engage with companies where we consider it’s in our members’ long-term interests to do so, and work to identify problems at a sufficiently early stage to minimise any loss of shareholder value.

We invest in thousands of companies across the world, so have to be careful to prioritise engagements with companies where there is the most potential value at risk and where engagement – either to understand the company better or to achieve change – can have the greatest impact.

So, if and when you do, how do you engage with the companies you invest in? How do you apply pressure?

We look to use the full suite of stewardship tools at our disposal. This includes engagement – either individually or collectively – and voting, but we also seek to exercise our other ownership rights, including AGM questions, pre-declarations and co-filing resolutions where we think progress on a material issue is not being achieved sufficiently quickly and escalation is required. I think it is important to use these tactics only when necessary: it takes time to build relationships and to truly understand a company.

Can you give us an example of this? Particularly since this proxy season is slowly drawing to a close.

There’s one company in our actively-run, internally-managed portfolio where we had a number of concerns around gender diversity and auditor rotation. We had engaged with them initially to discuss concerns, but escalated to votes against the following year. We then had some further, constructive meetings, including with board members, where we sought to offer possible solutions and feed through learnings from our engagements with peer companies on similar issues. These conversations resulted in a very welcome commitment from the company to tender for a new audit firm in 2024 as well as proactively recruit to boost the board’s diversity.

Very interesting indeed. If we dive a bit deeper here, how do you in fact shape your stewardship policy?

We look at the most material issues from both a top-down and bottom-up perspective, we focus on systemic risk across our portfolio – given our role as a globally diversified, universal owner of assets – and on stock-specific risk at our largest holdings, or those holdings where we think there are extensive ESG concerns. This materiality lens is fundamental in shaping our stewardship approach and how we dedicate finite resource to achieving the most significant impact for members. 


We invest in thousands of companies, so have to be careful to prioritise engagements with companies where there is the most potential value at risk.

Caroline Escott

Although the stock-specific issues will vary for each company, our thematic priorities for the next few years are: the climate transition; workforce treatment; sustainable financial markets; and responsible technology. Every few years, we review our thematic priorities using a proprietary materiality matrix which takes into account not just materiality, but also our ability to make a difference as well as the perspectives of our Trustee and members.

Speaking of making a difference, how do you see the role of asset owners in shaping the net zero agenda?

Asset owners hold a privileged role at the top end of the investment chain. By acting as demanding clients of our managers – where relevant – we have the ability to draw good practices on net zero, as with any other ESG issue, up through this chain. We also benefit from a certain purity of purpose: pension funds have a very clear fiduciary duty to invest in members’ best interests, and this means acting using all the powers at our disposal to help shift the world to a Paris-aligned trajectory.

Investors need access to as broad a range of stewardship tools as possible, to be able to effectively influence companies on material issues – such as climate change – in the interests of savers. Evidence also shows that long-term, sustainable performance is most likely to be found at companies with high corporate governance standards, where a diverse and expert group of senior decision-makers are supported by robust systems and processes that effectively align executives’ interests with those of shareholders.

And in order to get closer to those Paris Agreement goals, how do you 'green' your investment portfolio? What do you look out for?

Although we have a long-standing climate exclusions process for companies extensively involved with oil sands and thermal coal, it is worth emphasising that we don’t believe in what we call ‘paper decarbonisation’. We want to achieve real-world impact on climate change and contribute in whatever way we can to genuinely reducing global greenhouse gas emissions. 

With this in mind, we focus and engage intensively on the key emitters across our portfolio through our net zero engagement plan and based on assessments of companies’ net zero alignment, physical and transition risks through our bespoke proprietary assessment framework. Each engagement has specific milestones and objectives against which we assess a company’s progress.


By acting as demanding clients of our managers, we have the ability to draw good practices on net zero.

Caroline Escott

As well as working extensively with key emitters across the portfolio, we also want to dedicate resource to private- and public-market climate solutions that deliver both for members and for real world change. We have a long heritage in investing to support innovative firms and are actively exploring the opportunity set for climate solutions within our private markets portfolio, in addition to taking a role as lead authors on the IIGCC’s Climate Solutions Guidance for Listed Equity and Corporate Fixed Income.

Finally, I know you are passionate about the latest UK consultation on listings?

Having welcomed previous policymaker support for asset owners to be active stewards of their assets, in recognition that this is fundamental to achieving good outcomes for scheme members, we were therefore disappointed to see that the latest consultation on the UK listings regime proposes rolling back vital investor protections such as equal voting rights, which are fundamental to the investor voice being effectively heard by company decision-makers. I would urge your readers in the long-term investment community to respond to this consultation by 28th June in defence of the role that the UK’s corporate governance and investor protections play both in supporting effective stewardship, and in enabling the UK to continue to thrive as a leading global market.

Also read
Scottish Widows stewardship chief sees growing misalignment between pension funds and asset managers

Content Tags: Pensions  Engagement  Transition  Stewardship  UK 

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