20www.ppf.co.ukResponsible Investment Report 2019/20 21 Being active owners A p Working with our external managers Stewardship outcomes 2019-2021 engagement themes of our external provider p r o From a stewardship perspective, we engage directly with We engage with our external managers and expect ach our external managers. Robust ESG data and tools allow them to monitor and influence underlying issuers for EnvironmentSocialStrategy, risk and Governance us to better track and manage our risk exposure, report both equity and debt positions. We also expect them to • Climate change • Conduct, culture communication• Shareholder transparently to our stakeholders, and communicate exercise voting rights on our behalf, with the exception • Natural resource and ethics• Risk managementprotection and rights regularly with our external managers. of our segregated equities where we engage with stewardship• Human capital • Corporate reporting• Executive companies and vote directly via our external provider. • Pollution, waste and management • Business purpose remuneration In late 2019, we expanded the ESG data we receive from The overarching themes that we expect our external circular economy• Human and and strategy• Board effectiveness external providers to include a wider variety of metrics at agents to engage on include climate change, human labour rights both a portfolio and issuer level, including climate-related capital, diversity and inclusion, board composition and metrics (see pages 32, 35, Managing climate change risks executive remuneration. E and opportunities for more detail). xe c u Segregated equities engagement strategy t Engagement milestone process of our external provider io We continuously monitor our external managers on their 2019-2021 n overall ESG performance and stewardship activities, and The following section focuses on the progress of our 4 offer guidance and support on their ESG practices, aiming external provider with respect to our segregated to elevate the industry to a more common understanding equity mandates, as this is where we receive the most The company of RI. Development plans for external managers that do comprehensive reporting. However, a key action for the 3implements a strategy not meet our requirements are implemented. We ensure coming year is to work with our external managers of The company develops or measures to that these plans are meaningful and effective, and if signs pooled funds to improve the quality and comparability 2a credible strategy to address the concern. of improvement or genuine action towards ESG progress of reporting. achieve the objective, or are not made over a specified time period, we will re-1The company stretching targets are set evaluate our relationship. acknowledges the issue L Our external provider for stewardship of our segregated to address the concern. o as a serious investor o Our concern is raised k equity mandates has created a 2019-2021 Engagement concern, worthy of a in with the company at g & Voting roadmap to engage with companies. The f response. o the appropriate level. r Case studyroadmap identifies 12 themes across environment; w social; strategy, risk and communication; and ar Encouraging external manager governance, which cover material issues relevant to d industry collaboration through companies in all regions and sectors. engagementEngagement with investee companies happens in Progress stages, following specific milestones. Engagement can often take place over a multi-year period, so milestones Segregated equities engagement highlights We put PRI Principle 4, ‘promote acceptance track progress that are related to objectives set at the https://ppf.co.uk/reporting-investing-transparentlySegregated portfolios and implementation of the Principles within beginning of our interactions, which can vary depending Over the 2019 calendar year, we engaged with 136 engagement by region the investment industry’, into practice by on the types of issues raised. companies in our segregated equity portfolios on 426 encouraging our external managers to issues and objectives through our external provider. 10% become signatories. Actively demonstrating The following charts summarise our activities by region the benefits of PRI membership, among other Case studyand the most common topics that we engaged on. industry and collaboration initiatives such as Institutional Limited Partners Association Alternatives external manager (ILPA), GRESB, TCFD and Climate Action 26% 36% 100+, has seen a number of our external increases ESG integration managers in the Alternatives space becoming signatories to the PRI. Through continuous engagement, a long-standing US Alternatives external manager created a new vehicle designed to allow our RI expectations to be incorporated 27% within our mandate with them. North America Europe & UK Developed Asia (inc Aus & NZ) Emerging markets Source: EOS at Federated Hermes (external provider) 2019