Our approach to responsible investment
- Beliefs and purpose: Bupa’s purpose is helping people live longer, healthier, happier lives and making a better world. We remain committed to becoming Net Zero and achieving our science based targets by 2040. We continue to work towards reducing our environmental impact and improving healthcare, and we will focus on areas where we can make the biggest difference for people and the planet. With no shareholders, we can take a long-term view on performance and reinvest profits into providing more and better healthcare for the benefit of current and future customers. We aim to invest in a responsible manner which is aligned with our purpose, strategy and climate ambitions. We believe Environmental, Social and Governance (ESG) factors present both risks to the long-term performance of our financial investments, and opportunities to improve the impact of the investments on society and the environment.
- Our portfolio: Our investment portfolio is primarily invested in short-term cash instruments, with allocations to bonds and loans which are managed by external asset managers1. These longer-term assets are predominately corporate and government bonds; we only have minimal holdings of equities and alternative investments within certain associate businesses.
- Governance: Our approach to Responsible Investment forms part of our group-wide treasury policy, which is owned by the Group Treasurer and approved by the Chief Financial Officer and the Group Board. Local Finance Directors own the implementation of Responsible Investment in their respective jurisdictions. Progress against our 2040 Net Zero target and Science Based Targets (SBTs) is governed by the Sustainability Steering Committee, in close collaboration with core functional teams crucial to target delivery such as Finance.
Our responsible investment framework
- ESG integration: We require ESG factors to be integrated in all investment decisions, both internally and by our third party asset managers, and our investment staff receive training on ESG risk management. We also place exposure limits on the sectors and countries most at risk from climate change, while allocating capital to companies which have set SBTs.
- Engagement: Our external asset managers are required to engage directly with investee companies on ESG issues, and we have joined various investor forums including the Institutional Investors Group on Climate Change and the UK Sustainable Investment and Finance Association to be part of collective action.
- Climate change: To underpin our Net Zero ambition, Bupa’s SBTs have been validated by the Science-Based Targets Initiative (SBTi) confirming that all our emissions targets, including for financial investments, are aligned to a 1.5ºC world. Bupa has also joined Race to Zero, a global alliance pursuing a zero carbon economy. We have developed targets to reduce both the carbon intensity and Temperature Rating of our investments, and we’re taking action to achieve emissions reduction while helping to finance the transition to a low carbon economy. We also conduct climate stress tests to inform our approach to climate risk management in the investment portfolio.
- Baseline exclusions: Our preference is to help finance the climate transition by allocating capital to companies which have set credible SBTs to decarbonise their businesses, even if some are in currently high-emitting sectors. However, our policy prohibits investment in companies with the most significant adverse impacts on climate and health, namely companies involved in exploration, extraction and production of fossil fuels, the manufacture of tobacco, or the creation of controversial weapons (including cluster bombs, landmines, chemical and biological weapons and depleted uranium weapons)2. Investment in issuers which breach UN Global Compact principles is also prohibited, setting minimum requirements in the areas of human rights, labour, environment and anti-corruption.
- Implementation: We have specialised systems and data to support our Responsible Investment approach, including climate metrics and ESG ratings. These are used, both by external managers and internally, as an investment decision-making tool and to review the ESG profile of portfolios to ensure alignment with our policies and climate targets.
Our responsible investment disclosures
We’re signatories to the UN-convened Principles for Responsible Investment and our external asset managers are too. We are required to report progress on our SBTs to the SBTi annually. We’ve report in line with the task-force on climate related financial disclosures (TCFD) recommendations and also disclose against the Carbon Disclosure Project’s climate change questionnaire, a comprehensive review of how climate risks and opportunities are built into our business. Read more on our approach to sustainability and climate change.
1 This Responsible Investment approach is designed for Bupa’s subsidiaries and does not apply to Bupa’s pension schemes.
2 All prohibited activities are subject to a maximum acceptable revenue threshold of 5%.