Executive summary Climate change is one of the biggest issues on the global agenda Our achievements – one that has the potential to impact economies, businesses and people everywhere. We’re committed to managing these risks and 2019 opportunities across our investments on behalf of our members. This focused climate report shows how we are active in assessing Climate change policy and strategy approved by the Board and managing climate-related risks and opportunities across our Independent carbon audit of our listed equity and credit portfolios investment portfolio. It details our climate-related governance Minimum Environmental, Social and Governance (ESG) and carbon requirements integrated framework, strategy, risk management processes and chosen in fund legal documents metrics, aligning with the Financial Stability Board Task Force on TCFD disclosures reported in our Annual Report and Accounts Climate-related Financial Disclosures (TCFD) framework. 2020 First dedicated Responsible Investment (RI) report published Our climate change Climate measurements embedded into our portfolio management systems (see page 7, 9) strategic journey ESG and carbon reporting template mandated for external managers – 100 per cent of our Liquids managers now report this way (see page 9) We will continue to refine our processes and set new standards Stewardship services expanded to cover our in-house fixed income and cash books (see page 9) Step 1 Recognise and understand Step 2 the challenge facing us. 2021 Build out risk management, Step 3 monitoring and reporting New climate-aware equity benchmark designed to meet our investment strategy while processes. Evaluate results and determine 1 action points. reducing our exposure to climate risks by at least 50 per cent (see page 10) Refine processes as required, Innovative pilot project launched to develop an approach for assessing the Paris Agreement incorporating new data/methods. alignment of all our asset classes (see page 8) Next steps We see our climate strategy as fundamental We believe our achievements to date significantly reduce the risks facing our portfolio, without to our long-term investment goals. We can compromising our underlying investment strategy. Now we have better access to data and insight, reduce risk, ensure we are sustainable and we will keep evaluating and determining actions we can take to mitigate these risks further. provide industry-leading transparency. We will continue to take a leadership role as we refine our processes further and set new standards in other asset classes where access to data and tools is still scarce. Oliver Morley Chief Executive O昀케cer 1 When compared to FTSE All-World Index carbon emissions and reserves intensity