Strategy and risk management – continued Asset class Progress in 2020/21 Next steps Working with managers to drive We believe that this engagement with Summary of our progress transparency across our portfolio our fund managers has increased their across all asset classes Direct Liability Driven Started alignment assessment; Start counterparty exposure We expect our external fund managers awareness of potential climate risks. We Investment engaged on green gilts assessments to integrate material climate-related also believe that it has already led to a risks into their analysis and investment signi昀椀cant impact on the risk pro昀椀le of UK Public credit Extended engagement services to Start alignment assessment process and update us accordingly. our managers. The following table summarises the cover listed corporate holdings; This includes carbon footprinting and progress we’ve made in each asset measured carbon footprint scenario analysis along with assessing Our Liquids managers are now class on striving to manage our UK Private credit Climate-related questions in due Start alignment assessment physical risks, where possible. We preparing to share additional metrics climate-related risks over the year. diligence and ongoing monitoring regularly monitor and carry out in-depth in early 2022, particularly in the area of reviews of their activities to assess how TCFD climate metrics and analysis. We’re We continue to face challenges with Cash Extended engagement services to Start alignment assessment they’re voting and engaging with issuers also rolling out the same process to our a large portion of our portfolio, cover listed corporate holdings; on climate-related issues, as well as how Alternatives fund managers, and we particularly when trying to carbon measured carbon footprint they report their actions, both publicly aspire to have appropriate templates in footprint our Liability Driven and to us. place across the book by 2022. investment (LDI) and Hybrid assets, Indirect Equities Measured carbon footprint; started Transition to low carbon benchmark; as agreed methodologies and alignment assessment; started additional TCFD metrics required However, more can be done, so we’re underlying data for these assets are scenario analysis; 昀椀nalised new climate from managers continuing to drive transparency across still extremely scarce. aware benchmark our portfolio by focusing on each asset Taking action: By actively working class in turn. This year we worked with our Liquids managers, we’ve We continuously search for better Investment Grade (IG) Measured carbon footprint; Additional TCFD metrics required extensively with our Liquids managers achieved new levels of climate- ways to address this. In the meantime, and Emerging Markets started alignment assessment; from managers to develop dedicated reporting related insight. Insight that has we’re applying qualitative measures (EM) credit started scenario analysis templates that will give us insight into already significantly impacted where possible and focusing on Absolute Return Measured carbon footprint; Additional TCFD metrics required essential ESG, climate and stewardship their risk profile. engaging with public policymakers started alignment assessment from managers data across our Liquid portfolios. where we see a bene昀椀t to the market. Alternatives Climate-related questions in due Speci昀椀c asset class reporting diligence and ongoing monitoring; templates on ESG and TCFD metrics; started alignment assessment on start alignment assessment beyond Property Property We’re pleased to report that 100 per cent of our managers of publicly traded assets are now reporting under this new framework, so we have oversight over: ESG policy compliance ESG portfolio pro昀椀le during the quarter, including identifying and managing material ESG risks TCFD climate assessment of the portfolio Stewardship activities during the quarter, including engagement and voting