Railpen partners with industry bodies to study social factors

The manager, alongside the Pensions and Lifetime Savings Association, the Chartered Institute of Personnel and Development and think tank the High Pay Centre will also be considering how effectively the UK’s largest listed companies are discussing and responding to workforce social factors.

The group will explore what key workforce metrics are of most value to investors and examine the annual reports of FTSE 100 companies, a statement read

Furthermore, the group also intends to explore areas including the disclosure of workforce composition, such as gender and ethnicity, stability of the workforce, skills and capabilities and engagement and wellbeing, it added.

Within these major themes, metrics including aggregated turnover rate, the proportion of full-time and part-time staff, and employee ownership will also be key examples of what will be under review. 

The idea to create this partnership comes from earlier studies conducted by the PLSA, CIPD and the High Pay Centre, which concluded that investors’ interest on material workforce issues had not been translated into consistent corporate reporting, and as a group blue-chip companies still had some way to go to achieve best practice, despite some notable good examples. 

The research, which will be led by the public policy team at the CIPD, will be supported by the Railpen team, who have since March 2020 been probing portfolio companies on their approach to looking after employees’ physical, mental and financial wellbeing, the statement read.

As reported by Pensions Expertin March, the government called for a greater emphasis on the social element of pension schemes’ environmental, social and governance strategies as there was a concern trustees are ill-equipped to deal with these factors.

In a call for evidence published in March by the Department for Work and Pensions, Guy Opperman, minister for pensions and financial inclusion, said the industry has a good understanding of good governance. However, he is concerned that “social factors are not well understood”.

Joe Dabrowski, deputy director of policy at the PLSA, noted that “companies that are able to demonstrate the highest standards for measuring workplace factors like remuneration practices, workforce composition, stability and skills are more likely to be well run and deliver higher returns for shareholders”.

He added: “This new research will uncover the extent to which UK companies are serious about doing the right thing and attracting long-term, responsible investors.”

Caroline Escott, senior investment manager at RPMI Railpen, noted that the manager has been “engaging in workforce treatment with portfolio companies for many years, both as a financially material issue and as a topic which resonates with their members”.

She said: “For instance, we were one of the first UK pension schemes to update our voting policy to reflect how we vote at companies where we do not think employees have been treated fairly.”  

Escott added that the research will be “an important contribution to the discussion, at what is a critical moment in the journey to build back better”.