Quarterly Responsible Investing Update

Celebrating Earth Day 2025

Earth Day was celebrated on the 22nd April 2025. It’s our yearly reminder that we can all work together to help fight the climate crisis and work towards a low-carbon sustainable future.

This year’s theme was Our Power, Our Planet, aiming to unite everyone across the world to support renewable energy and triple the amount of clean electricity being generated by 2030.

Solar and wind energy are now the most affordable sources of new electricity in 82% of the world (source: RMI survey, 2024). As long-term investors, the shift to renewable energy is important as there’ll be growth opportunities across power generation, grid electrification and battery storage. Investing in energy companies could be more risky as they’ll need effective plans to manage the move away from fossil fuels and in holding any stranded assets as energy demands are changing.

As responsible investors, we can use our investment decisions to help manage the different risks and opportunities as we move towards a low carbon economy. We can consider carbon intensity and high carbon industries, for example in the energy sector, and we can invest more in companies with lower carbon intensity and companies which have effective plans for decarbonisation.

Where we can, we prefer to remain invested across all sectors of the economy, using the power of ownership to influence on important issues such as climate change. Our Investment Adviser and Third-Party Fund Managers do this for us, using engagement and voting rights as shareholders. You can see this at work in our voting disclosures. Sometimes industries aren’t a good investment long term – for example, they add too much risk or harm to people or the planet. In these cases, we’ll exclude them from our funds.

Find out more about Earth Day.

Being part of the UN Principles for Responsible Investment (PRI)

Demonstrating our commitment to being a responsible investor, we are becoming a signatory of the UN PRI.

The UN PRI is the world’s leading supporter of responsible investment. It’s independent, and helps members to think about Environmental, Social and Governance (ESG) factors when they’re making investment and ownership decisions. It also encourages investors to use responsible investing to potentially make better returns and manage risk more effectively.

As an Investment Manager, there are lots of benefits for us as a signatory of the UN PRI. We’ll join a global community of forward-thinking investors who are committed to driving positive change. It allows us to share best practice and join collaborative initiatives that aim to progress the collective impact of responsible investment.

The UN PRI provides leading research and resources and helps develop sustainable investment strategies and ESG investing. It also asks its signatories to show their commitment through accountability and transparency.

Our Annual Voting Disclosure

When you’re investing in shares, you also get certain ownership rights which allow you to vote at a company’s Annual General Meeting (AGM). Each year, we share a voting disclosure for our two directly invested funds, the Virgin UK Index Tracking Trust and Virgin Money Climate Change Fund. This year, we’ve updated these disclosures to align with our Investment Adviser Aberdeen’s approach. These disclosures mean investors can see the most significant votes made by these funds, the rationale behind the vote decision and what the outcome was.

In 2024, we saw significant votes across important topics, such as:

• Planet (environment) – climate reporting, strategy and decarbonisation plans
• People (social) – human rights in supply chains and AI accountability
• How companies are run (governance) – executive pay and board diversity

Investor influence is an important part of being a responsible investor. We’re working to challenge those who vote on our behalf, like Aberdeen and other Third-Party Fund Managers (within our fund-of-funds). For example, we’re working to understand Aberdeen’s approach to ‘say on climate votes’, which they don’t vote either for or against. We’re also reviewing the active ownership practices of Third-Party Fund Managers to make sure they align with our approach to being a responsible investor.

Find out more about influential investing.

Responsible Investing Fund Performance

Our responsible investing approach has now been put into place across all investment funds except for the Virgin UK Index Tracking Trust, which is under review. In 2024, we implemented new sustainability-related disclosures for our funds with sustainability characteristics. This was part of the Financial Conduct Authority (FCA) rules and guidance.

We measure non-financial fund performance across key metrics to make sure funds are delivering on our responsible investing approach.

These include:

• ESG scores – checking that our funds are shifting towards investing in companies with better ESG scores. These are external measures which rate how companies manage financial risks and opportunities related to ESG considerations.
• Carbon emissions – looking at the carbon emissions of our investments, checking that we are lowering our exposure to the most carbon intense companies to help manage climate risk and the need to decarbonise investments.
• Exclusions – our funds have specific exclusions which restrict investing in harmful companies or business practices.

Overall, across all relevant funds, non-financial metrics improved slightly during 2024. This is being driven by investment in new responsible investing funds for the fund-of-funds, and some changes to the companies invested in by the Virgin Money Climate Change Fund.