In brief: Railpen extends stewardship programme to private markets portfolio

Railpen is 'increasingly undertaking post-investment engagement' with private fund managers on material ESG issues, according to the investor's 2022 stewardship report.

Stewardship typically involves investors engaging with listed companies post-investment to ensure responsible management, but Railpen, a £37 billion ($46 billion; €43 billion) British pension fund for railway workers, has added private markets to its stewardship programme.

Railpen is “increasingly undertaking post-investment engagement” with private fund managers on material ESG issues, according to its 2022 stewardship report released this month. “In 2022, examples [of stewardship steps] included site visits to some of our main US private markets managers as well as engagement with some of our directly held companies in our pre-IPO portfolio around share structure and voting rights in any future listing.”

This is part of Railpen’s “manager assessment framework”, a stewardship programme initially introduced at the pension in 2021 to secure “ESG integration and active ownership” for listed equity investments. Railpen has also introduced a due diligence process for external private fund managers derived from the manager assessment framework, the report states. Railpen is underallocated to private equity, according to New Private Markets’ database: 7.2 percent of its portfolio is in private equity, against a 10 percent target allocation.