Commenting on our investments

Whether it’s Thames Water, Heathrow, or speculation over new nuclear projects – to give just three examples – USS is often referenced in the news.

With £75bn worth of assets to manage (as at 31 March 2023), our size and scale mean we run a globally diversified portfolio. This helps to protect against adverse events in a particular company, sector, market or region having a significant or material impact on the scheme.

As a result, our investments represent a small slice of the global economy: directly or indirectly, we own a little bit of most things.

A lot of the companies in which we invest are household names. Some of them are occasionally in the headlines. From time to time, the regions and sectors we invest in or are exposed to will also be in the news.

And sometimes, because of our existing positions and our profile as a large and sophisticated investor, USS is speculatively linked – rightly or wrongly – by the media with investment opportunities.

Members with an active interest in certain issues or developments – because they concern matters about which they hold strong views – might contact us directly about articles in the media.

Whatever it may be, there are times when there’s a lot of interest in USS and its investments.

We always aim to keep things in perspective – focusing on the overall outcomes achieved and reinforcing the point that, due to our diversified investment strategy, no one investment is of sufficient magnitude as to endanger the scheme’s ability to pay its liabilities as they fall due.

While we may occasionally be able to report on the activities or focus of a particular company we are invested in (as we do in our Stewardship reports), we do not want to risk confusing or misleading members into thinking that any one asset has a greater bearing on the security of their promised benefits than it actually does.

In addition, commenting on individual assets – or on speculation about potential investments – isn’t always wise from a commercial point of view. Indeed, it could even be prejudicial or detrimental to the scheme by influencing the value of an investment we hold, or we might seek to hold or dispose of. For example, if we told people we were intending to sell shares in a company we might see the value fall before we sold.

And there are occasions when we are limited in what we can say for legal reasons.

The Criminal Justice Act 1993, the Insider Dealing (Securities and Regulated Markets) Order 2023, the UK Market Abuse Regulation and similar legislation and regulation place restrictions on the sharing of information and from offering commentary where information might be market sensitive. For example, indicating we had made a decision to invest money to grow a company in which we were a shareholder without doing so in the proper way could illegally disrupt the market for that company’s shares or bonds.

I’ve written previously in detail on our approach to responsible investment and made clear that we recognise the scheme is not able to invest as each individual member might choose to invest their own money if they wished to reflect their personal ethical views. True to our legal duty, we will continue to invest in the best financial interests of the scheme’s members and beneficiaries, so we can pay members’ pensions now and long into the future. As we think about the best financial interests of the scheme, we will seek to take account of all financially material environmental, social and governance related risks that are bound up in each investment.

There will be occasions when we will comment on developments, where we are able and where we feel it is appropriate and proportionate. We recognise accountability and transparency are critical to maintaining trust and confidence in the scheme, the trustee, and its investment team, and regularly consider where we can communicate more.

We disclose a considerable amount of information on our website and in annual publications – such as the scheme’s Report and Accounts, Stewardship Report, and TCFD reports. We also publish quarterly Financial Management Plan reports that monitor the scheme’s funding position and, in doing so, provide a regular snapshot of the aggregate performance of our investments.

We are, however, a long-term investor and are, more-often-than-not, playing ‘the long game’. There will be times when we want to say more to members and stakeholders but there may be compelling reasons, that are in the scheme’s interests, to keep our counsel.

While this may at times be frustrating – for us, for our members and for our stakeholders – it is part and parcel of upholding the promises being made to our 500,000-plus members. As with everything we do, the bigger picture and the scheme’s best interests will always be front-of-mind.