Our commitment to stewardship

Stewardship is allocating and overseeing capital to create long term value for beneficiaries which leads to wider economic, environmental and societal benefits.

Stewardship is a priority for USS and a core part of our approach to investment. We’re a long-term, responsible investor with a legal duty to manage investments in the best financial interests of our members and beneficiaries, so we can pay pensions long into the future. Being an active steward of our investments is an important part of this. We’ve a dedicated team that oversees our stewardship approach and ensures it remains a priority across the business.

We look at stewardship in two ways. As a Universal Owner, USS is exposed to certain market-wide or systemic issues, which could impact the investment returns we seek. These include risks such as climate change as well as the need for well-functioning markets and appropriate investor protections.

We also want to understand the investment risks and opportunities at the individual asset level. This might include directly engaging with a company and using our voting rights to hold companies to account, encourage good governance and drive improvements.

We are proud to have continued to have been a Financial Reporting Council (FRC) approved signatory to the UK Stewardship Code since the first opportunity back in September 2021. We believe that the Code, which sets the global benchmark for good practice in stewardship, has had a positive impact on the global investment landscape, giving investors a clear roadmap and incentive to pursue positive outcomes.

We recently submitted our fourth Stewardship Report to the FRC, setting out how active stewardship remains an important aspect of our investment approach. The FRC will review our report and we expect to be confirmed as a continued active signatory later in the year.

The Code comprises a set of 12 apply and explain Principles for asset managers and asset owners (like USS), and each year since 2021, we’ve published a Report showing how we have applied these principles. As in previous years, our 2024 Report explains principle-by-principle how we’ve applied them, with a particular focus on the financial year 2023-24.

The Report contains examples of our approach. At the systemic level, we’ve included information of our collaborative work with the University of Exeter on climate scenarios. Published in September 2023, this work presents four new climate scenarios, which aim to present a richer, broader and more realistic range of possible scenarios on which investment decisions can be based.

We’ve also been doing more to steward our private market investments. Our Private Markets Group, for example, has developed a Climate Risk Framework to capture both physical and transition climate risks across both new deals and existing assets.

While it can’t cover all of our work, the comprehensive report is a valuable snapshot of our activities over the past year and is just one of the ways we disclose our approach and outcomes.

While our commitment to active stewardship isn’t dependent on the Code, we’ll confirm once our signatory status is renewed later in the year.