16 www.ppf.co.uk Responsible Investment Report 2019/20 17 Our RI approach – continued A Ongoing monitoring and rating We have an internal RI policy, as well Use of ESG data to identify ppr of external manager mandates as guidance and implementation and manage ESG risks oa c When monitoring our external documents which set out our At a strategy and individual portfolio h managers, we assign to them an ESG expectations of external managers level, ESG risks (including climate- rating which forms part of a wider and in various asset classes. These related risks) are identified internally integrated performance-monitoring are reviewed and updated when using monitoring processes, tools, framework. The ESG rating (specific to new insights and best practices data and systems – enabling us to asset class and strategy) scores our are available, such as when new engage with our external managers external managers across a number guidelines are issued by the PRI around risk identification and of areas, such as RI governance, or other organisations. These management activities. ESG data alignment and resources; integration documents support the assessment is available through our portfolio of our external managers, and E of ESG factors within investment management systems, and we x inform our due diligence process e c analysis and decision-making; are developing our processes u and requirements for incorporating t stewardship; and reporting. All ESG into fund terms. When for monitoring ESG and climate- ion external managers are required to communicating our expectations to related risks at a fund, asset class report material ESG issues alongside managers, the feedback is tailored and strategy level as part of risk their investment performance, and RI to the areas where we see scope for reporting (see page 30 for more on is a standing agenda item in external improvement. our activities around climate-related manager review meetings. strategy and risk identification). Exercising our ownership is currently operationally complex. For rights such as shareholder asset classes outside listed equities, rights and voting such as listed credit, alternative credit L and private equity, our external o o Active ownership through share k managers also report to us on in voting and issuer engagement is a g stewardship activities and progress f key part of our role as a responsible o r (see more on voting activity in 2019 w asset owner. It is an essential risk on page 27 and climate-related voting ar management tool that ensures that on page 33). d boards are accountable and are fulfilling their stewardship obligations. While these activities are outsourced, We welcome the enhanced UK we maintain oversight of our external Stewardship Code (January 2020) agents by monitoring their voting and and will develop a new stewardship engagement practices in order to policy and enhance our stewardship enhance the quality and quantity of practices to align with the Code. We their stewardship activities. For high are supportive of its aim to further profile issues, where possible, we will improve the quality of engagement enquire about our external managers’ between asset owners, external voting intentions ahead of AGMs. managers and issuers, and the emphasis it has on establishing Engagement with industry strong and transparent corporate and collaborative initiatives governance practices. We participate in industry-wide Within our global listed equity collaborative initiatives to help portfolio, our external agents develop best practice and to ensure (managers and other vendors) vote that our own RI standards are aligned and monitor portfolio companies for with industry standards. On pages ESG risks – if concerns arise, they will 20, 28-29, we outline outcomes of engage with issuers on our behalf. engagement with external managers, For our segregated equity portfolios, industry and collaborative initiatives we have appointed a specialist designed to improve or set RI Engagement & Voting provider to standards across asset classes. support our stewardship activities. For pooled equity funds, we rely on the relevant external manager’s stewardship activities, since extracting voting rights from pooled investments