LEARN MORE ABOUT ALTRUISTIC CAPITAL
Three Minutes With
What can employers consider doing at this time?
Many employers have already started a process of reassessing their overall benefits. Those that operate their own individual company pension scheme are being required by The Pension Regulator to undertake a review to ensure that their arrangement really does offer the best value to members.
This can act as a catalyst for positive change, as reinvigorating the workplace pension can be a key recruitment, retention and ultimately financial wellbeing gamechanger. Also in this post-pandemic recovery phase, employers will be highly motivated to realise the efficiencies and cost savings that scheme consolidation can offer.
Employers can use potential structural change to their workplace pension to address employees’ financial wellbeing, as part of an overall service offering from a collective vehicle such as the Aegon Master Trust. Undertaking changes to the pension arrangement and integrating that with a strategic approach to employee financial wellbeing is a powerful tool for retaining key employees and attracting the very best candidates. That in turn strengthens employee motivation and commitment and ultimately drives shareholder value.
Employers can use potential structural change to their workplace pension to address employees’ financial wellbeing
Employers are facing a real challenge with record-breaking vacancies in the UK job market
What is altruistic capital and what does it mean to employers and employees?
We would define altruistic capital as taking a strategic approach to the financial wellbeing of employees, in order to give organisations a competitive and compelling edge when recruiting. This is borne out of research undertaken by the World Economic Forum. Employers are facing a real challenge with record-breaking vacancies in the UK job market – there is a very competitive landscape for both recruiting and retaining talent and workforce across all sectors.
For employees, as the economy reopens, they're having to readjust to new working practices, having gone through a very traumatic time that has caused destruction and turmoil to normal patterns of work. This, coupled with the re-emergence of inflation, is having a real impact for some.
Having an appropriate benefit package is very compelling to encourage motivation and engagement among employees and ultimately competitiveness for organisations.
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The global pandemic has shone a light on wellbeing, including financial wellbeing. Now, at a time of record-breaking vacancies and high inflation, employers must change their approach if they are to recruit and retain talent.
Andy Dickson, Master Trust Strategic Development Director at Aegon Workplace Investing, argues that employers should review their benefits schemes, with workplace pensions at the core, to maximise the value they offer to employees. An “altruistic capital” approach will improve employee motivation and ultimately the organisation’s competitiveness.
INTRODUCTION | Altruistic capital | Financial wellbeing | Corporate action
Financial wellbeing
Altruistic capital
Background
INTRODUCTION
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Three
Minutes
With
Andy Dickson on how an ‘altruistic capital’ approach to employee financial wellbeing can give employers a competitive edge
Columbia Threadneedle Investments' Sonal Sagar & Michael Hamblett
INTRODUCTION | ASSET CLASS | THE FUND | portfolio snapshot
portfolio snapshot
THE FUND
ASSET CLASS
INTRODUCTION
Should employers have more focus on their employees' financial wellbeing?
Impaired financial wellbeing is directly impacting the competitiveness of organisations. Over the period of a year, it is costing employers up to £6.2bn in reduced productivity. That's directly as a result of the psychological impact that impaired financial wellbeing has on the motivation and the engagement of a workforce. A toxic combination of presenteeism and absenteeism can result through genuine financial worries that employees have.
If an employer recognises this and addresses it by offering more holistic support to their workforce in terms of their relationship with money, then that has been demonstrated to improve the overall productivity of an organisation and ultimately add shareholder value.
Coats Group makes thread, which is an energy and water intensive process, but essential for clothing, footwear and other industrial applications. Coats is attempting to make the process greener and more sustainable by targeting reductions in water consumption and carbon emissions. The company has also pioneered a fully recycled thread, using no virgin plastic.
This is an example of the type of company we look for in the Threadneedle UK Sustainable Equity fund: a company that is perhaps under the radar, but a leading player in a fragmented market, standing to benefit from consumer trends towards sustainability.
We met the company’s head of sustainability to understand how its non-financial risks and sustainable opportunities are managed, and our opportunity to ask questions and bring the investment case to life, far more than reading the annual report.
Threadneedle UK Sustainable Equity Fund: Portfolio snapshot
Coats Group
Johnson Matthey
Reckitt
Johnson Matthey is a chemicals company that makes solutions for cleaner energy and cleaner air. It has an experienced board and is investing in new and future technologies such as fuel cells and hydrogen. To continue driving its sustainability agenda, this year, it is incorporating ESG and sustainability criteria in executive pay.
Improvements are expected in its top line, margin and cash flow. We believe it is undervalued and, when you combine that with the fact that well over 80% of its revenues contribute to the UN SDGs, it is one of the leading companies within the fund.
To have confidence in our investment, engagement is key. We have met management, board members and collectively engaged with the UN Principles for Responsible Investment on its supply chain. This gives us a better understanding of the risk/return characteristics.
Reckitt is a health, hygiene, and nutrition company. It has had big changes in management and strategy over the last few years and now it is embracing its size and scope, driving more from the group level. As a result, it is well-positioned to effect change.
There is a big focus on how its products are made, with reductions in energy and water usage and more recycling. Reckitt works alongside governments and public health bodies to educate people on issues including cleanliness, infant nutrition, sexual health – this is on top of the positive impact of its products within its hygiene, health and nutrition divisions.
Again, engagement is key: we have met the CEO, CFO, chair, directors in charge of executive pay, heads of sustainability to enable us to get a holistic picture of how the company is improving its management of ESG and sustainability.
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Source: Morningstar as at 31 July 2021, net of fees, based on Z Acc share class (ISIN: GB00BZ21SS97). Net performance using 12pm prices, unadjusted income reinvested. Peer group is IA UK All Companies. The index is a Composite benchmark. The fund launched 30 October 2015. Past performance is not a guide to future performance.
Threadneedle UK Sustainable Equity Fund: Performance (%)
Fund (net)
FTSE All-Share
IA UK All Cos
3yr
5yr
2020
2019
2018
2017
2016
Since Launch
Year to Date
18.6
44.5
-0.5
21.6
-7.0
14.0
6.7
53.4
9.5
6.6
27.0
-9.8
20.5
-9.2
12.4
12.3
38.8
11.7
12.7
44.0
-7.7
21.9
-10.3
13.0
11.7
49.5
12.3
Corporate action
INTRODUCTION | Altruistic capital | Financial wellbeing | Corporate action
CORPORATE ACTION
FINANCIAL WELLBEING
Altruistic capital
INTRODUCTION
Residual risk
