What is stewardship and how can it make a difference?

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Stewardship is a word you’ll see often in our content. But we realise it’s not always fully understood, and we’d like to change that. 

We have launched a Responsible Investing Glossary guide explaining more about common responsible investing terms, including the new SDR labels. To complement these, we have launched a suite of regularly reviewed materials, including our guides to responsible investing and stewardship, as well as animations explaining the concepts of ESG factors and stewardship.

What is stewardship?

When we use the term stewardship we’re talking about our responsibility to manage environmental, social, and governance (ESG) factors in our investments and creating value through dialogue with the companies in our portfolios.

At Standard Life, we have the size and scale to drive meaningful change and positively influence corporate behaviour. A key way we aim to deliver this is through our sustainable investment and stewardship activity.

What does stewardship look like?

There are major challenges facing society today that our customers and shareholders quite rightly exect us to act on. We do this via engagement with the companies we invest in and by using our shareholder voting rights.

Engagement is when we work with companies to embed best practice and drive real-world chnge. We do this through our asset managers, our in-house stewardship team and in collaboration with other investors to increase our power of influence.

When it comes to voting, the responsibility to vote usually lies with the investment managers we partner with, to vote on our members' behalf, to approve or reject boards' decisions and/or other shareholders' proposals. Our team monitors closely how this is done in alignment with our philosophy and principles on responsible investment.

What is Standard Life's approach to stewardship?

We’re committed to focusing on the big issues, safeguarding the interests of our customers and shareholders, and creating a better future for all our stakeholders. That’s why our approach to stewardship covers four main areas:

• Climate change: Climate change presents both risks and opportunities for the companies we invest in.
• Nature: We recognise the need for companies to protect and restore the planet’s natural resources.
• Human rights: We believe that the responsibility to respect human rights applies to all companies.
• Controversies linked to the United Nations Global Compact (UNGC) breaches: We expect companies to adhere to international standards on human rights, labour rights, environmental issues and anti-bribery and corruption efforts.

Why does stewardship matter to us?

This work is part of how we deliver on our purpose: helping people secure a life of possibilities. By actively engaging with the companies we invest in and using our influence to drive better outcomes for society and the environment, we’re working to protect long-term value for our customers and shareholders.
 

Key highlights from our stewardship progress this year

 

Targeted climate action 

We engaged directly with 25 companies, which together account for around 40% of our financed emissions. In 2025, 63% of our tailored climate objectives were partially or fully met, continuing a positive upward trend. In parallel, our asset management partners engaged with 2,249 companies on climate change through more than 3,300 meetings, covering an additional 43% of financed emissions in high emitting sectors.
 

Understanding nature-related risks 

We strengthened our approach to nature by expanding company research and engagement on nature related topics, including biodiversity, deforestation and water scarcity. This included using the TNFD LEAP framework to better understand nature related risks and engaging collaboratively through initiatives such as Nature Action 100, with early improvements seen in disclosures and sector specific metrics.

 

Championing human rights 

Through our continued participation in the PRI’s Advance initiative, we deepened engagement with selected companies on human rights risks in their own operations and supply chains. After the second year of dialogue, 74% of our tailored human rights objectives were met or partially met, reflecting progress in areas such as policy development, governance, remedy processes and due diligence.

 

Addressing violations related to UNGC principles

We also engaged with companies linked to controversies in relation to the UNGC principles according to third-party sources. Twice a year, we scan reports of allegations using data from two service providers. We conducted in-depth research on companies on our target list and set engagement objectives. In our review of those objectives for 2025, we assessed that 73% of our engagement objectives were achieved or partially achieved, which is an improvement from 54% in 2024. 

 

Improving governance and accountability 

We continued to assess how closely our asset management partners’ voting activity aligns with our Global Voting Principles, by monitoring voting at 300 companies across six managers. While climate proposals, director elections and executive pay remain key areas of focus, our analysis is being used to strengthen oversight and drive improved alignment where required.

 

Holding our asset management partners accountable 

Our asset management partners reported more than 6,400 engagement meetings with over 3,100 companies across environmental, social and governance topics in 2025. We assessed 13 managers through our ESG assessment framework, covering 96% of assets under investment management agreements, and saw growing use of defined engagement objectives and additional stewardship tools beyond dialogue.

 

Listening to our customers 

Our research continues to show that sustainability matters to customers. While many are balancing cost of living pressures, 73% expect their pension provider to take responsible investment decisions on their behalf – insights that continue to shape our investment offering and stewardship priorities.

 

Embedding stewardship into our default pension option

Our default pension option is supported by active stewardship, helping to protect and grow our customers’ money over the long term. Looking at the six sustainability focused funds, we’ve seen good progress overall. We assessed 22 companies and found that:

• 14 showed strong alignment between climate progress and how much we invest in them
• 2 were fully aligned.

In simple terms, we tend to invest more in companies making better progress on climate, and less in those making slower progress. Companies in the middle are usually held at similar levels. You can find more detail on where we can improve and why on page 52 of our 2025 Stewardship Report.

Voting is one of the key ways we support the sustainability goals of our customers’ pension investments. In 2025, we regularly challenged management on ESG issues at around 80% of meetings with specific companies, and held directors accountable where progress on climate issues was limited.

We also strengthened how we oversee the asset managers running investments in our default solution, using targeted engagement and additional stewardship tools where needed to drive better outcomes on our customers’ behalf.