Over longer periods of time (five years or more), investments such as stocks, shares and funds have the potential to give you higher returns compared to cash savings. But the value of investments can fall as well as rise. There is a chance you may get back less than you put in. Ensure you have safety net savings before starting to invest. Eligibility criteria, fees and charges apply. The content on this page applies to the Royal Bank Invest Personal Portfolio Funds (PPF).
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Royal Bank Invest
Responsible Investing
Our approach to responsible investing
Coutts is our investment manager for Royal Bank Invest. In addition to traditional risk measures, Coutts consider environmental, social and governance (ESG) issues, that could impact the investments they manage on our customers’ behalf.
We call this approach ‘responsible investing’. Our approach is guided by our investment philosophy and seeks to align to our customers’ investment objectives.
We apply our responsible investing approach to those Funds that we have discretion to manage on our customers’ behalf (‘Managed Assets’). This includes Coutts Managed Funds (CMaF), and Personal Portfolio Funds (PPF).
Our Funds are made up of custom-built funds and third-party funds with limited exposure to direct holdings. The custom-built funds are managed through our strategic relationships where Coutts defines the investment parameters and ESG policies. Coutts don’t define the investment parameters or ESG policies of third-party funds.
The UK regulator has defined four labels for sustainable investment, designed to help investors find funds which have a specific sustainability goal. Each label has specific criteria labelled funds must align to.
The Funds we manage do not have a UK sustainable investment label because our Responsible Investing approach does not align to these criteria; in particular, they do not amount to a sustainability ‘objective’ or ‘goal’ of the Funds.
Environment
The impact on the environment, including climate change, damage to nature, loss of wildlife, and making the move to a low‑carbon economy fair for everyone.
Social
The impact on society (human rights, human trafficking, modern slavery, diversity and inclusion, and supply chain services).
Governance
The impact on the business environment (ethics, code of conduct, anti-greenwashing, diverse board, and renumeration).
Coutts implement our responsible investing approach through three activities:
Coutts assess a range of factors to check that the assets in which they invest meet the strategy and goals of our Funds whilst managing overall risk and reward. This includes assessing a range of ESG factors.
To assess ESG factors, they have built an in-house responsible investing assessment. The covers topics such as:
- responsible investing policies and commitments
- approach to climate change
- integration of ESG factors into investment decision-making and oversight
For more information on how this is applied, please see their Responsible Investing Policy.
Voting and engagement are levers to influence and communicate with companies and encourage responsible behaviour. This can occur in three ways:
- fund managers may engage directly with companies or appoint stewardship service providers to do so on their behalf.
- engagement with fund managers on important topics, for example, if their ESG approach materially changes.
- collaborative engagement with other asset managers through industry initiatives.
EOS by Federated Hermes (EOS) provides voting recommendations and engages directly with companies held by certain custom-built funds.
EOS is a global engagement and stewardship service that focuses on promoting responsible investment practices. It is a part of Federated Hermes, an investment management firm, and its primary aim is to influence companies to adopt sustainable business practices by engaging with them on ESG issues.
Exclusions are typically applied to limit exposure to underlying investments that generate revenue through controversial activities.
We implement exclusions in two ways. Firstly, through revenue thresholds which work by setting limits on the amount of money a company can generate from specific activities that are considered high risk. Our policy limits this to 10% of revenue. Secondly, companies are assessed on a pass or fail basis against defined criteria in our exclusions policy.
The exclusions policy is applied to certain custom-built funds and direct company securities, each of which we may hold within our Managed Assets.
Third-party funds do not implement our exclusions as we do not define the ESG policies of their funds. They may apply their own unique exclusions approaches.
The impact of exclusions varies over time based on how we hold the investments, and will generally reduce, rather than remove the exposure.
This policy sets out the investment exclusions applied by Coutts.
Our ambitions
Coutts recognise that climate-related risks and opportunities are financially material to many investments. By working to understand them, they aim to manage clients’ investments more effectively. As part of this they have the following climate related ambitions.
Net zero by 2050: Coutts has a long-term goal to reach net zero across assets under management by 2050.
Carbon intensity 2030: Coutts aim to reduce the Weighted Average Carbon Intensity (WACI) of equity and fixed income holdings by 50% by 2030 against a 2019 baseline.
To find out more on our targets, progress and approach to climate change, please see our Succeeding with Customers report.
Useful links
Important documents
Get into the detail of our Personal Portfolio Funds and Coutts Managed Asset Funds.
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