Responsible investing activities

Responsible Investing

Context and commitment

The purpose of this statement is to explain the approach of Barclays Investment Solutions Limited (BISL) to Responsible Investing across Discretionary Portfolio Management (DPM) and managed funds. BISL provides services to UK residents.

BISL offer a range of investment options, with core services including DPM services and managed funds. BISL has several ranges of managed fund solutions, including multi-asset funds and single-asset class funds.

BISL has been appointed as the delegated investment manager by Barclays Asset Management Limited (BAML) for its UK domiciled funds and by external management companies for selected Luxembourg and Irish domiciled funds. BISL is responsible for making all day-to-day investment decisions on behalf of each fund range wherever it is domiciled. As a long-term investor, BISL seeks to generate competitive returns for our clients as well as the creation of long-term value for all stakeholders.

For us, Responsible Investing means integrating material Environmental, Social and Governance (ESG), considerations (among others) into our investment decisions and fulfilling our stewardship responsibilities through engagement and voting. This is a contributing element in meeting our fiduciary duties towards our clients.

As a long-term investor, we believe material ESG considerations can impact portfolio returns, and so are one of the important relevant considerations in managing risk effectively and delivering successful investing outcomes for our clients.

These beliefs align with the Barclays’ values of Respect, Integrity, Service, Excellence and Stewardship which apply across the Barclays Group, including BISL.

Overall approach to Responsible Investing

We seek to deliver competitive investment returns for our clients, and we believe Responsible Investing supports this aim.

We believe ESG considerations could impact the financial or operational performance of a business such that we think they may impact long-term investment returns. In considering these ESG factors, and consequently a broader set of data, we believe that this approach enables investors to make a more informed judgement about the financial performance and longer-term viability of an investment. Therefore, as part of our investment process, we seek to incorporate foreseeable risks that arise from ESG factors.

A majority of the assets we manage on behalf of our clients are invested indirectly, through third-party fund managers.

Our partnership with EOS at Federated Hermes Limited (EOS)

We recognise that in BISL, our role as responsible investors is to aim to integrate material ESG considerations into our investment decisions and stewardship responsibilities, by positively influencing companies’ long-term management of material ESG risks through engagement and voting. This is consistent with our business objectives and aims to deliver competitive investment returns for our clients and to create long-term value for stakeholders.

BISL undertakes engagement and voting in partnership with our stewardship services provider, EOS at Federated Hermes Limited (EOS), in respect of certain holdings relating to specific services.¹ We believe that via our partnership with EOS, we can have more influence to engage with investee companies on long-term risks and opportunities. This is a contributing element in meeting our fiduciary duties towards our clients.

With a track record of nearly two decades in reaching successful engagement outcomes, EOS also has one of the world’s largest teams of engagement specialists.² Their diversity of skills, experience, global reach and cultural understanding give them the gravitas and credibility to access and maintain constructive relationships with company boards, policymakers and regulators.

EOS engages on behalf of clients, including BISL with a wide range of stakeholders – including companies, government authorities, trade bodies, investors and NGOs – to seek to identify and respond to both company-specific, market-wide and systemic risks.

Through our partnership with EOS, we can take a comprehensive approach to stewardship, engaging and voting with corporates and key stakeholders such as policymakers and regulators.

Please note our stewardship approach (guided by our stewardship provider EOS) may differ across different regions. Our engagement and voting process is regularly reviewed and updated in light of our existing commitments and ambitions, the rapidly changing external environment (including changing laws and regulations) and are informed by engagement with key stakeholders and our fiduciary duties to our clients. As such, our decisions are not solely limited to ESG/sustainability related factors or our membership of any voluntary codes or groups.

Engagement and voting

Stewardship through engagement and voting is an important part of our approach to responsible investing. We view engagement and voting as an important mechanism through which to act as a lever to encourage best practice and change in investee companies on material ESG issues where appropriate.

We believe in the engagement approach of promoting constructive dialogue with investee companies by building long-term relationships to seek to influence ESG and other practices that may impact our clients' investments. We believe companies that can better manage material ESG considerations could be less prone to severe incidents such as fraud, litigation or reputational risks. We believe that via our partnership with EOS, we can better engage with investee companies on long-term risks and opportunities.

Voting forms part of BISL's overall stewardship strategy and we use our rights as shareholders to seek to drive desired change on ESG and other considerations – consistent with our aim to deliver competitive investment returns for our clients and to create long-term value for stakeholders.

Based on various metrics, BISL funds³ filter EOS's voting recommendations in relation to company holdings and, if deemed necessary, our BISL Fund Selection team may deviate from EOS's recommendation. At BISL DPM, for our direct equity holdings, we use our rights as shareholders to seek to drive our desired changes. Following receipt of EOS’s voting recommendations, our Equity portfolio managers meet to discuss this information for a select number of voting issues in advance of making the voting decision on behalf of our clients. Our Equity portfolio managers are ultimately responsible for making voting decisions.

All voting activities sit alongside engagement practices, reflecting both BISL’s approach of promoting constructive dialogue with investee companies by building long-term relationships to seek to influence ESG and other practices that may impact our clients' investments – this is mostly undertaken by EOS.

Engagement and voting reporting

In our view, transparency is an integral part of good governance. We disclose engagement and voting activities publicly. The following reports provide summaries of engagement and voting activities for holdings within BISL DPM investment strategies and on holdings within segregated mandates that form part of BISL funds.

Please note the BISL funds reports are produced and/or provided in their entirety by our stewardship partner EOS at Federated Hermes Limited (EOS) with the voting summaries and disclosures reflecting our voting instructions⁴, rather than the votes that were actually cast.

It is our intention to exercise voting in the UK, although at times our ability to do so may be hindered by regulatory and practical considerations, as well as internal restrictions.

Please note, not all reported activity will apply to individual accounts which deviate from our core strategy holdings, for instance where investment restrictions have been requested.

Please note all engagement and voting reports can be accessed by all stakeholders and types of investors, regardless if stated otherwise.

Please note our stewardship approach (guided by our stewardship provider EOS) may differ across different regions. Our voting and engagement process is regularly reviewed and updated in light of our existing commitments and ambitions, the rapidly changing external environment (including changing laws and regulations) and are informed by engagement with key stakeholders and our fiduciary duties to our clients or our membership of any voluntary codes or groups.

We review periodically the information included in the engagement and voting reports with the aim of ensuring it is accurate, up to date and complete, but we do not accept liability for any information that is not, or which has been superseded. If you use or rely upon the information in the engagement and voting reports, this is at your own risk, and nothing published in it is intended to constitute advice.

Industry Initiatives

BISL became a signatory to the PRI in 2023. Prior to this, and since 2016, BISL’s subsidiary Barclays Asset Management Limited (BAML) was a signatory.

The PRI is the world’s leading proponent of responsible investment. It works to understand the investment implications of Environmental, Social and Governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions via six Principles.

Being a signatory to the PRI allows BISL to publicly demonstrate its approach to responsible investment:

• Reporting to the PRI demonstrates our ability to evidence to clients, prospects and other interested parties how we integrate ESG factors into our investment decision-making processes and engage and vote to enhance returns and better manage risks.
  
  
• We are dedicated to upholding and promoting the six PRI Principles and contributing to developing a more sustainable global financial system.
  
  
• We are committed to investing responsibly, engaging with portfolio companies and exercising our voting rights. This is consistent with our fiduciary responsibilities.
  
  
• We are continually seeking to advance our approach to ESG integration, engagement and voting and we will report on the six Principles to evidence our progress.

BISL also became a signatory to the UK Stewardship Code in 2023. The UK Stewardship Code sets high stewardship standards for those investing money on behalf of UK savers and pensioners and those that support them. According to the Financial Reporting Council (FRC), stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries with the aim of achieving sustainable benefits for the economy, the environment and society.

Responsible Investing Library

Read our stewardship code commitment

Read our shareholder engagement statement

Read our responsible investment policy

Supporting material

This website is not designed to be taken as preferred view from Barclays Investment Solutions Limited (BISL), expert advice, investment advice or a recommendation and any reference to specific companies is therefore not an opinion as to their present or future value or broader ESG credentials. Reliance upon any of the information on this website is at the sole discretion of the reader. Some of the views and issues discussed on this website may derive from third-party research or data which is relied upon and may not have been validated. Such research and data are made available as additional information for the reader where appropriate.

There is currently no globally accepted framework or definition (legal, regulatory or otherwise) of, nor market consensus as to what constitutes, an ‘ESG’, ‘green’, ‘sustainable’, ‘climate-friendly’ or an equivalent company, investment, strategy or consideration or what precise attributes are required to be eligible to be categorised by such terms. This means there are different ways to evaluate a company or an investment and so different values may be placed on certain ESG credentials as well as adverse ESG-related impacts of companies and ESG controversies where these are considered.

The evolving nature of ESG considerations, models and methodologies means it can be challenging to definitively and universally classify a company or investment under an ESG label and there may be areas where such companies and investments could improve or where adverse ESG-related impacts or ESG controversies exist. The evolving nature of sustainable finance related regulations and the development of jurisdiction-specific regulatory criteria also means that there is likely to be a degree of divergence as to the interpretation of such terms in the market. We expect industry guidance, market practice, and regulations in this field to continue to evolve. We and other market participants continue to navigate inconsistencies and conflicts in the manner in which climate policy is implemented in the regions where the Barclays Group operates, including as a result of the adoption of anti-ESG rules.

Any references to ‘sustainable’, ‘sustainable investment’, ‘sustainable data’, ‘ESG’, ‘ESG data’, ‘climate data’ or other similar terms or related exclusions in this article are not to any jurisdiction-specific regulatory definition or other interpretation of these terms unless specified otherwise.

Any third party manager’s assessment of a company, based on the company’s level of involvement in a particular industry or their own ESG criteria, may differ from that of other funds or an investor’s assessment of such company. As a result, the companies deemed eligible by the third party manager may not reflect the beliefs and values of any particular investor and may fall below certain ESG-related standards or result in negative ESG impacts.

The evaluation of companies in respect of their ESG credentials and characteristics is dependent on the timely and accurate reporting of climate, sustainability and/or ESG data by the companies. Successful application of the fund’s strategy will depend on the third party manager's proper identification and analysis of ESG data. Importantly, climate, sustainability and/or ESG data may not be audited or otherwise reviewed by an independent third party and we do not guarantee the information is accurate, complete, and up-to-date.

The climate, sustainability and/or ESG data, models and methodologies used, and the judgements, estimates or assumptions made, are rapidly evolving, including scientific evidence relating to climate change and scenarios outlining pathways to net zero, and this may directly or indirectly affect the metrics and data contained herein. While we seek to identify and select third party fund managers based on ESG considerations, we can accept no responsibility for the execution of a third party manager’s ESG or sustainability strategy or for the sustainability profile of the third party manager’s funds.