Making our business socially and economically useful - Nigel Wilson
Our purpose is to be economically and socially useful by improving the lives of our customers, building a better society for the long term and creating value for our shareholders, suppliers and communities.
We pride ourselves on deep thinking and excellent execution. Our medium to long term strategy is driven based upon our five growth drivers of ageing populations, welfare reform, creating real assets, globalisation of asset markets and digital. Our short term emphasis is on delivering excellent value to customers through competitive pricing and efficient delivery of service.
Two important priorities for me are to increase the supply of affordable housing and improve customers financial resilience by making financial services more accessible.
Our achievements in 2015
Our insight into the needs of vulnerable customers helped us create and improve products and services.
As well as campaigning for solutions to Britain’s severe housing shortage, we took action ourselves and continued to invest in house building, especially in the buy-to-rent and modular housing sectors.
Our direct investment programme, where we have committed to put £15 billion into UK infrastructure, including urban regeneration programmes, has now reached £7 billion of investments.
We’ve taken steps to ensure that economic resilience for UK families is improved and that the problem of exclusion from the benefits of financial services is tackled. Better financial education plays an important role.
We support the need to build a low carbon future through our own investments in clean energy, our commitment to low carbon business operations and put environmental issues high on the agenda of those companies we invest in.
We have £746 billion in assets under management and we seek to influence ethical board behaviour in the companies we invest in, including ensuring executive pay is in line with corporate performance.
Diversity is also a vital issue, both in the boardroom and within our own management structure, where our 50/50 by 2020 gender diversity programme aims to increase the percentage of women in leadership and management positions across our business.
Our US business continues to expand and a key success this year was to put in place independent materiality assessments of our US activities.
I believe we have to embedded social responsibility into our culture. Our purpose is to help improve society and to reward our shareholders through our central goal of ensuring that we help customers build financial security.
However our belief in high standards of corporate responsibility mean little unless they are translated to build a better and financially more secure future for all of society.
We need to be trusted by all our stakeholders: our investors who seek fair returns on their investments, our customers who rely on us in times of need, our employees who look to us to provide for their families, our regulators who need to know that we will keep our customer promises, our suppliers whose businesses depend on us and our communities who benefit from our social investments.
The creation of economic value is vital for society. For example, our financial success in generating £1,355 million in profits in 2015 also meant that we made total tax contributions in 2015 of £813 million in the UK and £134 million overseas, which includes taxes borne by us and taxes collected from employees and customers. As well as providing employment for around 9,000 people we helped over 15 million people globally through insurance cover, building savings or by providing retirement income. Additionally we managed the investments of some 3,000 institutions, including some of the UK’s biggest pension funds.
Our employees are crucial to our social responsibility strategy. The pattern of employment is changing. Our traditional retail insurance and savings businesses require fewer people as the businesses digitise and processes become automated. The changes to products and regulation have changed our business model. In 2015 we announced that our Kingswood office would close with the majority of jobs being transferred to Cardiff, Hove and London. However, we also are launching an important new business with many new employment opportunities. Our modular home construction business based in Yorkshire, creating more than 400 new jobs, can help solve the UK’s housing shortage through the building of modern, digitally designed homes. Like many of our direct investments we are investing funds from our retirement businesses to enhance the risk adjusted returns available.
Our business continues to evolve. We need to take advantage of increase market inclusiveness, helping many more millions of people enjoy the security and independence that insurance and savings bring.
Our Group Corporate Responsibility and Ethics Committee constantly review the group’s environment, social and governance performance (ESG). For example, we’re improving transparency in the following areas:
Proving Social Value
We aim to quantify the economic and social impacts of our direct investments in housing, energy, urban regeneration and healthcare.
Our investments conform to the UN PRI principles for responsible investment. We aim to offer greater transparency and control for our clients to reflect their priorities in respect of ethical investments and environmental screening. We engage with all investee companies on environment, social and governance issues
Service and Culture
We monitor employee and customer satisfaction levels. For example employee survey and net promoter scores. We are currently rolling out new initiatives for vulnerable customers, empathy and business culture. Culture is as important as regulatory compliance.
Working with government
Our work with government supports jobs, growth and financial resilience including through improved housing and pensions. We offer evidence-based solutions to all parties to help positive policy development.
We continue to set ourselves challenging ESG targets for the group which help us do business better or improve the lives of future generations. These are detailed in our doing business better section including timescales for delivery.
Group Chief Executive Officer
Chair – Group Corporate Responsibility and Ethics Policy Committee