Pension schemes need to deliver measurable stewardship outcomes if they want to create value for members, according to Railpen.
Speaking at the Pensions Management Institute’s annual conference in London last week, investment manager Matt Lomas outlined how the £34 billion fund recently updated its systemic stewardship strategy through to 2030. The fund represents about 350,000 members of the industry-wide pension scheme for Britain’s railway sector.
Refreshed strategy zeroes in on four key themes
“We wanted to really ensure that we were focusing on the right areas, and really central to that was financial materiality,” Lomas said. The scheme’s strategy continues to center on four themes: responsible technology, sustainable financial markets, workforce issues, and climate and nature. But the review prompted changes to several underlying priorities.
Within sustainable financial markets, the fund chose to increase its focus on board effectiveness and shareholder rights.
Lomas pointed to weakening governance standards around the world.
He cited the ousting of BP chair Albert Manifold — a move the fund supported — as an example of the kind of board accountability it wants to see more of.
Related: MPs force review of LGPS contributions
Leaning into board effectiveness as governance standards slip
“We’re leaning in to board effectiveness a bit more, and that’s because you see quite a big rollback in terms of corporate governance standards around the world and shareholder rights,” Lomas told delegates. The revised strategy introduced structured outreach plans for each work theme, with specific objectives and milestones to help measure progress.
Railpen is also pushing for stronger investor rights, particularly the principle of “one share, one vote.”
Lomas noted that dual-class share structures are becoming more common and said “we don’t think this is great because it means that there’s potentially less alignment with ordinary shareholders and pension fund members.” His colleague Caroline Escott chairs the Investor Coalition for Equal Votes, which lobbies against dual-class arrangements that erode minority investor voting rights.
Railpen’s participants can expect a more deliberate, less scattered effort.
Instead of engaging across dozens of topics, the fund tries to pinpoint issues where its influence can actually shift outcomes — board composition, voting rules, transparency.
Not every focused effort makes headlines, but it does reflect a realistic assessment of what a single pension fund can and can’t change in global markets.
Related: Custom vs. pre-printed labels: Pros and Cons
Public policy engagement is a growing part of the toolkit.
“There are many different ways that pension funds can engage with the market and with companies. We’ve talked about bottom-up engagement, but there’s policy engagement, there’s collaboration, there is voting, and there’s also doing good research and looking at new emerging topics,” Lomas said.
Climate and nature: a targeted, company-level approach
Climate and nature remain core to Railpen’s approach because of the financial risks they pose across multiple sectors. But the fund chose a more targeted approach.
Lomas said the scheme has focused its nature work on areas where investors can have greater influence, specifically biodiversity and water-related risks.
“I think the challenge here is that nature, in particular, is such a broad subject, and there are so many different areas you could focus on. If you focus it down onto some specific areas where you think you can make a difference as an investor, then it empowers you to really focus on where you can have an influence,” he explained.
Company-level engagement, he added, beats a purely systemic approach: “There are so many things you could engage on, but you really have to be focused on what’s actually good for the long-term value of the company and therefore in the interests of beneficiaries.”
Leave a Reply