Strategy and risk management – continued New equity benchmark Engaging with issuers When we reviewed the results of Our RI reports provide detail on the 50% our 昀椀rst carbon audit of our Equities stewardship activities and progress portfolio in 2019/20, it was clear that of our stewardship provider, our fund Our new equity our equity benchmark’s fundamental managers and any direct engagements benchmark targets characteristics were leading to a we have carried out over the year. relatively high weighting in carbon- This includes activities related to a reduction of at intensive companies. climate issues. least 50 per cent We decided to address this by from the FTSE developing a new climate-aware version All-World Index’s of our equity benchmark, in partnership carbon emissions with our index provider FTSE Russell. and reserves We wanted to 昀椀nd a balance where we remain engaged with companies intensity. that are critical to the transition while also identifying companies that we feel are no longer participating or whose industries are in terminal decline. In March 2021, we 昀椀nalised the Custom Collaborating with industry FTSE All-World Climate Minimum • We’ve been a signatory to the Variance Index. We’re spending the 昀椀rst Principles for Responsible Investment few months of the 2021/22 昀椀nancial year (PRI) since 2007 and our Head ensuring a smooth transition to the new of ESG currently sits on the PRI's index with our external fund managers Infrastructure Advisory Committee and service providers. • We’re also an investor member We anticipate that the new index will of the IIGCC result in a carbon reduction of nearly • During the year, we supported two thirds compared with the original the UK ‘Green+ Gilt Proposal’ for a benchmark. This will immediately sovereign bond combining social with feed through into our passive equity environmental impact, developed mandates. However, we also expect this by Impact Investing Institute, Green to help drive a reduction in our footprint Finance Institute and Grantham in the active equity mandates in time. Research Institute. We contributed to discussions around developing robust and measurable metrics for reporting Taking action: Our new on these co-bene昀椀ts. climate-aware equity benchmark • We encourage greater climate will help us to differentiate disclosure through supporting between companies that are initiatives such as the CDP and part of the low carbon transition the TCFD and those whose risks we’re not • We also engage with companies comfortable being exposed to. identi昀椀ed by Climate Action 100+ and the TPI to improve their transparency and management of climate-related issues