Railpen, one of the UK’s largest pension managers, has released its 2024 Stewardship Report, spotlighting its collaborative, system-wide approach to addressing risks like cybersecurity, audit quality and shareholder rights.
The report has highlighted collaborative initiatives and policy updates aimed at protecting long-term value for its 350,000 members.
The report has outlined Railpen’s proactive stewardship across its active ownership, ESG integration and climate workstreams. Railpen partnered with Royal London Asset Management to produce a guide on cybersecurity risks, helping investors navigate this growing systemic threat.
Railpen also worked with the Chartered Institute of Personnel and Development and the Pensions and Lifetime Savings Association to call on FTSE 350 CEOs to improve reporting on workforce practices—an initiative that was well received by companies. The group plans to follow up in 2025, feeding into the debate around the UK Employment Rights Bill.
Another development is Railpen’s update of its Global Voting Policy for 2025, designed to strengthen shareholder protections as the regulatory landscape shifts. The updated policy reinforces Railpen’s defence of shareholder rights, particularly in response to changes in the UK listing rules and the adoption of the EU Listing Act. It sets out expectations for how Railpen will vote against company proposals that undermine shareholder democracy—such as dual-class share structures—or seek to re-register in jurisdictions with weaker investor protections. The policy was shared with all FTSE 350 companies, underscoring Railpen’s proactive stance against the ‘race to the governance bottom.’
Railpen and RLAM issue cybersecurity guidance for investors
Railpen also worked with Governance Perspectives Ltd. to publish the Acting on Audit report, which offers practical recommendations to improve audit standards, transparency and accountability across the market.
Railpen’s advocacy efforts extended to its work as co-founder and chair of the $4.5 trillion Investor Coalition for Equal Votes, where it coordinated a response to the UK’s listing rule proposals. Railpen also helped quantify the potential costs of these changes to investors and beneficiaries, supporting other industry bodies in their consultations.
The report also features case studies of Railpen’s direct engagements with companies on material ESG and governance issues, highlighting how it uses tools like AGM questions, co-filing resolutions and pre-declarations to deliver positive outcomes.
Michael Marshall, director of investment risk and sustainable ownership at Railpen, commented: “At Railpen, we and the Trustee have long believed that stewardship on financially material issues is a core part of our fiduciary duty. We follow the evidence that companies with good corporate governance practices and engaged shareholders are more likely to achieve the superior long-term financial performance that members of the railways pension schemes need.”
Caroline Escott, head of investment stewardship at Railpen, added: “Our purpose is to secure our members’ future. Generating the required returns to achieve this mission is challenging. To succeed, we need to use all the levers available to us – including stewardship – to drive long-term value creation at the company and market level.
We are not afraid to act where we think the latest industry or market development may damage member outcomes. This includes advocating against the ‘race to the bottom’ we see from companies and policymakers on what evidence shows are financially material issues, including diversity, equity and inclusion, climate change and shareholder rights.
There is a misconception that good governance and sustainable business practices limit economic growth. However, Railpen’s approach will continue to be grounded in the evidence that integrating, and acting upon, material ESG issues is an important contributor to good outcomes for members.”
