Appendices Appendix 1: PPF climate change policy Appendix 2: Disclosure metrics from the Annual Report and Accounts Beliefs Manager expectations Disclosure metrics as recommended by the TCFD Equities Equity As a long-term investor, we have a duty We expect our external fund managers 1 2 to consider all 昀椀nancially material risk to understand and integrate material Metric Scopes PPF Equities Coverage benchmark Coverage factors in our investment decisions, climate-related risks into their analysis Metrics based on investor allocation (using EVIC3) for $6.5bn Equity portfolio: including climate-related. We believe and investment process. This includes Total Financed Carbon Emissions (tCO2e) Scope 1+2 796,972 97.6% 818,760 97.3% climate change can materially impact undertaking carbon footprinting and Financed Carbon Emissions businesses, markets and economies scenario analysis, assessing asset (tCO2e/$m invested) Scope 1+2 122.1 97.6% 125.4 97.4% globally in a number of ways, from exposure to physical risks, and engaging Financed Carbon Intensity a societal perspective as well as with issuers, where relevant for their (tCO e/$m revenues) Scope 1+2 225.5 97.6% 256.9 97.3% environmental. asset class. 2 Metrics based on weights (WACI) for Equity portfolio: We’ve developed a speci昀椀c climate In monitoring the exposure and WACI (tCO e/$m revenues) Scope 1+2 242.7 97.6% 298.7 97.4% change policy, as we see climate change performance of our external fund 2 as a systemic and non-diversi昀椀able managers, we’ll review how they’re concern, which has the potential managing climate-related risks and 1 Based on the de昀椀nition set by the Greenhouse Gas (GHG) Protocol. The GHG Protocol has set the global standard for GHG reporting, notably the three scopes of reporting information: Scope 1: Direct GHG emissions from operations; Scope 2: Electricity indirect GHG emissions (the to signi昀椀cantly a昀昀ect the value of opportunities, including voting and companies’ indirect emissions from electricity, heating, or steam consumption); Scope 3: Other indirect GHG emissions. More detail is available at: our investments across the short, engaging with issuers on climate-related https://www.ghgprotocol.org/sites/default/昀椀les/ghgp/standards_supporting/Diagram%20of%20scopes%20and%20emissions%20across%20 medium and long-term, throughout issues, and how they’re reporting to us the%20value%20chain.pdf the global economy. We also believe on their actions. 2 FTSE All World Minimum Variance Index that opportunities can exist and be 3 Enterprise value including cash = market capitalisation at 昀椀scal year-end date + preferred stock + minority interest + total debt exploited for companies and assets Collaboration Credit well-positioned for the transition to a low-carbon economy. Credit 1 Metric Scopes PPF Credit Coverage benchmark Coverage Assessment We also collaborate with the wider investment community on climate Metrics based on investor allocation (using EVIC) for $6.2bn Credit portfolio: change issues, as a signatory to the PRI Total Financed Carbon Emissions (tCO2e) Scope 1+2 329,106 86.2% 525,417 68.7% and as a member of the Institutional Financed Carbon Emissions We recognise the complexity and IIGCC. We seek to encourage greater (tCO2e/$m invested) Scope 1+2 53.0 87.6% 84.6 71.8% barriers to identifying and assessing climate disclosure through supporting Financed Carbon Intensity the forward-looking 昀椀nancial initiatives such as the CDP and the (tCO e/$m revenues) Scope 1+2 192.4 86.2% 202.8 68.7% materiality of climate-related impacts TCFD, and through engaging with 2 on our investments. However, we companies identi昀椀ed by Climate Action Metrics based on weights (WACI) for Credit portfolio: seek to assess the exposure of our 100+, so that exposure to climate WACI (tCO2e/$m revenues) Scope 1+2 317.9 93.1% 255.3 84.3% investments to climate-related risks risks (and opportunities) can be better and opportunities through a range understood. 1 Bloomberg Barclays Global Credit Index of metrics and analysis, as the tools available to measure these evolve. Reporting and engagement Source: Certain information ©2020 MSCI ESG Research LLC. Reproduced by permission; no further distribution (PPF holdings as at 31 December 2020). Consideration will be given to the Metric de昀椀nitions: potential impacts on asset prices and • Total Financed Carbon Emissions: Measures the Scope 1 + Scope 2 tonnes of CO equivalent emissions for which an investor is responsible by their total overall 昀椀nancing. Emissions 2 return expectations across both short We’ll communicate and engage on are apportioned across all outstanding shares and bonds (% EVIC). • Financed Carbon Emissions: Measures the Scope 1 + Scope 2 tonnes of CO equivalent emissions, for which an investor is responsible, per USD million invested, by their total overall and longer-term time horizons, and how the actions and progress that have 2 this could inform our decisions around been taken around our climate change 昀椀nancing. Emissions are apportioned across all outstanding shares and bonds (% EVIC). • Financed Carbon Intensity: Measures the carbon e昀케ciency of a portfolio, de昀椀ned as the ratio of Scope 1 + Scope 2 tonnes of CO equivalent emissions for which an investor is strategic asset allocation and portfolio 2 strategy to relevant bene昀椀ciaries and construction. responsible to the revenues for which an investor has a claim by their total overall 昀椀nancing. Emissions and sales are apportioned across all outstanding shares and bonds (% EVIC). stakeholders, reporting in line with TCFD • WACI: Measures a portfolio’s exposure to carbon intensive companies, de昀椀ned as the portfolio weighted average of companies’ carbon intensity (Scope 1 + Scope 2 tonnes of CO 2 guidance for asset owners. equivalent emissions per million USD of revenues). We seek to oversee all new and existing investment arrangements in a way that takes account of climate transition and adaptation risks, as well as resilience, opportunities and inclusivity, in line with 2°C or lower climate-related scenarios.