Strategic Report | Governance | Financial Statements | 37
Within the framework, we adopt a principles-based approach seeking to achieve four overarching objectives: • to analyse and identify risks and opportunities arising from responsible investment factors; • engage in frequent dialogue with external managers and providers; • actively identify and monitor our portfolio for investments not aligning with our RIF and take action; and • transparently disclose responsible investment characteristics of our portfolio to stakeholders. We also have a scoring system called purple, red, amber, yellow, green (“PRAYG”), which assesses ESG risks associated with individual investments. This ensures ESG factors, which also influence other risks such as credit and market risks, are fully considered. We have set out our commitment to stewardship activities and are actively involved in a number of initiatives. GREEN AND SOCIAL INVESTMENTS Just’s Green Bond Framework (“Framework”) was developed in 2020 and is aligned with the International Capital Markets Association Green, Social and Sustainability Bond Guidelines verified by a second party opinion provided by Sustainalytics. Following the full allocation of Just’s Green and Sustainability Bonds, we continue to increase the Group’s exposure to green and social investments, in line with our overarching frameworks to deliver positive outcomes. In 2023, we originated a total of £325m into eligible green and social investments. Eligible investments in 2023 included UK and French social housing projects that benefited those with learning disabilities and people from lower socioeconomic backgrounds, in addition to renewable energy investments in the UK and USA. More details of how green and social assets are defined can be found in our Sustainability Bond Framework www.justgroupplc.co.uk/sustainability/our-approach . In addition, a significant proportion of our in-force investments are in lifetime mortgages, which fulfil an important social purpose by helping people in later life to release equity from their home to supplement their pension income.
Our long-term retirement income promises, which provide peace of mind and certainty to our customers, are backed by long-term income producing assets, the majority of which are managed in-house. On the illiquid side, these are split between the lifetime mortgages that we originate and manage ourselves and other illiquid assets, which includes a diverse range of investments such as infrastructure debt, private placements, commercial real estate mortgages, and long income real estate. We have built a panel of 14 specialist external asset managers, each carefully selected based on their particular areas of expertise to originate investment opportunities for us. These opportunities are then assessed with multiple lenses by our in-house investment team who select the most suitable investments to pass through our internal screening process through a right of veto on each potential investment. The illiquid credit assets (excluding lifetime mortgages) account for £4.9bn or 21% of our £24bn Investments portfolio, but this is expected to increase over time, as the proportion backing new business is higher than the in-force portfolio. In 2023, we originated £1.6bn of illiquid credit assets in addition to £0.2bn of lifetime mortgages to support new business pricing, optimise backbook returns and provide certainty through long-term fixed rate financing into the economy. RESPONSIBLE INVESTMENT FRAMEWORK We developed our Responsible Investment Framework (“RIF”) in 2019. The RIF defines our approach to integration of responsible investment-related factors in our investment decision making processes. This year, we have continued to enhance our approach to implementation by more explicitly incorporating climate change into our day-to-day trading and credit research processes. For more detail on this, see page 45. We annually review our framework to remain in line with market standards.
£ 325 M has been invested over the past year into green and social investments
£ 1.6 bn of illiquid credit assets originated in 2023
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