Governance RI governance at the PPF Our climate change policy New internal RI reports Climate change is a systemic and This year the ESG team developed a Upholding our Inadequate governance is often a factor in schemes entering the PPF, therefore we have a responsibility to non-diversi昀椀able concern, which can new quarterly RI update report for the RI strategy exemplify good governance on behalf of our members and levy payers. signi昀椀cantly a昀昀ect the value of our Investment Committee. The report Our RI strategy and framework investments across the short, medium reviews our RI policies, processes and incorporates ESG risks and and long term. policy review schedule. It provides opportunities across our entire updates on stewardship, manager investment portfolio, with an PPF Board Highest governing body with oversight of RI (including It also presents opportunities for appointments and monitoring, and key essential focus on risk management. climate-related) issues. companies and assets that are well- quantitative metrics such as ESG scores It’s implemented by the Investment positioned for the transition to a low- and carbon intensity by asset class. and ESG teams and overseen by carbon economy. We also provide updates on the management of our climate-related the CIO. Investment Responsibility for developing and maintaining the Fund’s In 2019, we 昀椀nalised a speci昀椀c climate and other ESG risks monthly with Identifying our exposure Committee (IC) RI principles and policies (including climate-related) is change policy (see Appendix 1) that the CIO and the Head of Investment and determining appropriate delegated to the IC. outlines our approach to these risks Strategy. We highlight portfolio-relevant management of climate-related risks and opportunities. information or events in our daily in our investments is a strategic investment meetings as they arise. priority for the PPF, as a speci昀椀c area Investment Led by the Chief Investment Officer (CIO). Responsibility for of focus within our Strategic Plan. Team ensuring adherence to the RI framework and associated Taking action: The Investment It is vital to our RI approach that policies (including the integration of climate change) across Committee reviewed this policy Taking action: New quarterly we engage with and advance the ESG Team all asset classes, both internally and externally managed. in 2020/21 as part of its annual reports mean we have greater ESG practices of our external review cycle. transparency than ever before. fund managers, bringing them The ESG Team, as part of the Investment Team, provides on the journey with us. We support and expertise, oversees appropriate implementation New Statement of Developing a new stewardship continuously review all existing of the RI framework, engages with portfolio managers, Investment Principles policy and potential managers’ policies, and monitors investments for ESG risks and opportunities A new stewardship policy was ESG integration processes and (including climate-related). This year we chose to update our reporting to ensure they meet our Statement of Investment Principles developed during the year and evolving minimum standards. We (SIP), in line with the DWP’s amended approved by the Investment Committee will not allocate more capital to occupational pension schemes in March 2021. managers that fall short of these regulations, to advocate best practice. standards. This year, we carried Within the new SIP, we included ESG This policy outlines our approach to this out with an increasing focus and climate risks into our investment stewardship – including how we engage on climate, including in the more risk register. The updated statement with our fund managers and underlying challenging private markets assets. Our investment committee Our Investment and ESG teams also outlines our stewardship approach, issuers around the management of climate-related risks – as part of Overseen by our Board, the Investment Committee develops Our Investment team manages over half our assets internally, taking 昀椀nancially material considerations For more detail on this, see page 9. our investment principles, strategy and risk management while we appoint external fund managers for the remainder. – particularly climate change risks – into managing the Fund, in line with the approach, including our RI principles and policies. Every asset class is managed in line with our RI strategy and account across our investments. It also new SIP. under the stewardship of the Investment Committee. details how we monitor external fund As part of its oversight function, the Investment Committee managers and outlines the RI beliefs requires evidence of the implementation of our RI processes. Within the Investment team, we have a dedicated group of which drive our strategy. The Committee also reviews our policies annually to ensure ESG specialists. This ESG team works extensively with our Taking action: The new they stay relevant and ambitious. internal portfolio managers and external fund managers stewardship policy guides how to monitor our portfolio – in line with leading disclosure we engage with managers and frameworks – and reports to the Board, Investment Taking action: Including ESG issuers on climate-related risks. Committee, and Asset and Liability Committee on and climate risks within our SIP reflects our ambition to our progress. promote industry best practice.