10 www.ppf.co.uk Responsible Investment Report 2019/20 11 Leadership statements – continued A ppr Chief Investment Officer’s Overview of the PPF oa c h statement E Our duty is to protect the millions x e c of people who belong to UK defined u t We believe it is vital that we demonstrate a benefit (DB) pension schemes. When ion robust and effective approach to RI, and we these schemes fail, we’re here to see the integration of material ESG issues as support their members. an essential part of the investment process When an employer becomes insolvent and its pension at the PPF. scheme cannot afford to pay its promised pensions, we compensate scheme members for the pensions they have lost. We take over responsibility for payments once we have assessed that a scheme L cannot afford to buy benefits from an insurance o o company which are equal to, or more than, the PPF k Our unique investment strategy Best practice around ESG One area that we are pushing in would pay. Currently around 277,000 people are g f has always been rooted in prudent implementation in some asset strongly is increased disclosure and o members of the PPF. Before the PPF, these people r risk-taking with a focus on generating classes and investment strategies reporting. At present, the level of w could have faced significant financial uncertainty and ar sustainable long-term returns, and is still developing, so we work in fund-specific ESG reporting provided hardship. We protect more than 10 million members d RI is a core component of this partnership with our external by many external managers is of more than 5,000 DB pension schemes. strategy. managers and incentivise them limited, and we will not be able to to evolve their processes. Due to fully deliver on our own reporting I am pleased that our ESG our size, we have the opportunity requirements without underlying How we are funded capabilities have grown in the to encourage improvements in transparency from our external past year, with an additional ESG ESG integration across the globe, managers. In the meantime, to We raise the money we need to pay PPF benefits specialist joining the Investment and we see this as an area where obtain a thorough oversight of and the cost of running the PPF in four ways: Team to support our Head of we can have the most influence. our portfolios in relation to ESG 11% ESG. We have also expanded We have also established a set of risks and opportunities, we are our access to available ESG data, minimum requirements around ESG investing significantly in expertise to insights and analytics, which allow integration and stewardship, and monitor these portfolios ourselves. Split of funding sources us to better track, monitor and will ensure that our expectations Whilst challenging, we recognise Assets from pension schemes ultimately report on various risks are met in order to continue that a tailored approach is often transferred to us and opportunities. Applying the relationships with our external necessary as different schemes The return we make on our TCFD’s recommendations has been managers. will have different characteristics 22.5% 40.5% a key area of focus, as we continue and expectations. The momentum investments to integrate climate-related risk around ESG integration has built The levy we charge on eligible assessment and management. in recent years, yet we are still in pension schemes the early stages of the journey, and Recovered assets we secure recognise that all partners must from insolvent employers work together to deliver on this successfully. We have £32 billion in our investment portfolio Barry Kenneth (31 March 2019) which is continually growing, and is 26% currently managed both internally and externally. Source: The PPF