What is responsible investment?
Responsible investing is an investment strategy that seeks to consider both financial returns and social good.
Responsible investing aims to combine better risk management with improved asset returns by including environmental, social and governance (ESG) factors in the way that the investment decisions are made and in how fund managers engage with the companies they invest in. In a world where there is increasing focus on sustainability, those managers who incorporate responsible investing into their processes may be able to generate better investment returns in the longer term.
What impact do the new requirements have on the Plan?
The Trustees recognise that incorporating responsible investment principles can mitigate various risks that your investments face, such as the risk that asset values will be negatively impacted by climate change for example.
Over the last 12 months, the Trustees have taken advice from their investment consultant (Aon), and formalised their policy on considering non-financially material factors including climate change. The Trustees receive quarterly ESG ratings from Hewitt Risk Management Services Limited (HRMSL, the Plan’s delegated fund manager) on the Plan’s investment funds to assist with monitoring. These ratings provide the Trustees with a score from 1 to 4 on the funds available to members in the Plan. HRMSL engages with fund managers on how they integrate ESG factors into their process and will consider replacing managers that do not engage meaningfully on ESG.
The Trustees are at the early stages of implementing their overall responsible investment plan, which will continue to change and evolve over the coming years.
Details of the Trustees’ Statement of Investment Principles, including their approach to responsible investment can be found at www.kraftheinzpension.co.uk/usefuldocuments
Progressive Growth Phase Fund (PGPF) changes
Why are these changes being made now?
These changes are being made to reflect changes in Aon's preferred approach to achieving diversification and provide a better structure for delivering long-term investment performance. The changes follow an in-depth review of the Fund by the investment manager and disappointing longer term performance.
What interest rate is currently used to measure the PGPF's performanceand is it changing?
The PGPF's performance is currently measured against the three month LIBOR interest rate. LIBOR is the London Inter-Bank Offered Rate.
The Fund's new objective will be measured against the SONIA interest rate. SONIA is the Sterling Over Night Interest Average.
LIBOR and SONIA are the rate of return that banks can get in cash. They are very similar, although each is measured slightly differently.
Why is the name of the Fund changing?
The name of the Fund is changing to the 'Aon Managed Diversified Multi Asset Fund' as the manager believes the revised name provides a better description for the Fund and the underlying assets in which it will invest.
Will the Plan meet any transaction costs resulting from the change to the PGPF?
These changes are being made by the investment manager (HRMSL) as part of their ongoing management of the Fund. The cost of making these changes will be covered by the members investing in the Fund and will be reflected in the unit price of the Fund.
As the investment manager's performance is judged on the unit price, it is in the investment manager's interests to make the changes in as cost-efficient way as possible.
Remember that the changes are expected to improve returns over the longer term – they are being done with members' best interests in mind.