Pension Protection Fund Responsible Investment Report 2020/21 5 Messages from our Chair, CEO and CIO The last year proves that environmental, social and The role of institutional asset governance (ESG) related risks, which can manifest well owners like the PPF is crucial as into the future, can also be material to investments the world adapts to the climate today. Sound social practices for companies and crisis and a post-pandemic workforce welfare proved to be an essential pillar for world. We are committed to any company in the times of the COVID-19 crisis. rising to this challenge and pleased to share the positive action we’ve taken this year. Transitioning away from fossil fuels One example of this is the introduction We’re actively setting new is also a critical step for the future of new ESG and climate reporting standards in our work with of the world. The realities of physical that we require from our managers. climate risks are becoming ever more our external managers and apparent as we see the impacts of Gathering evidence of the stewardship engaging with important climate change on a global scale – such activities that our managers have as the devastation caused by recent undertaken on our behalf has been initiatives around climate challenging. I’m particularly pleased wild昀椀res, 昀氀oods and hurricanes. The rise with how we developed our new ESG change, diversity and fair in the importance of limiting warming to 1.5ºC – and the role investors should reporting templates to address this. working conditions. play in this transition – are clear. We recognise that stewardship is an Since becoming a PRI signatory in important lever to bring long-lasting By acting as active, responsible Kate Jones, Chair of the Board 2007, we have come a long way, yet change. This year we published our stewards, we can ful昀椀l our now more than ever, it is vital to keep stewardship policy, which sets out our a prudent steer on our investments priorities and expectations in the area. mission of protecting people’s for our members and stakeholders. We also welcome the development of futures while having a real more standardised voting reporting and Responsible investment (RI) is a speci昀椀c We’ve come a long way since area of focus highlighted in our 2019–22 guidelines (including around con昀氀icts impact on the world around us. becoming a PRI signatory in Strategic Plan. As we move into the of interest) from the Pensions and Lifetime Savings Association (PLSA). 昀椀nal period of this plan, we look to Oliver Morley 2007, but the challenges of accelerate our work in this area. Diversity and inclusion is another major Chief Executive O昀케cer climate risks are more real We are committed to setting an example area of importance to our organisation than ever. It’s vital to keep a of best practice implementation. that is also increasingly gaining focus In the past year, we welcomed and in the investment industry as a whole. prudent steer on our contributed to the Department for We work actively within our own investments for the bene昀椀t of Work and Pensions (DWP) consultations business to set new standards, and on reporting on climate risks and monitor our managers to ensure that members and stakeholders, considering social factors. We are the organisations managing our assets and to use our in昀氀uence for actively considering how the investment and the companies we invest in re昀氀ect the greater good. industry can best support UK legislation the societies in which they operate. requiring the Government to achieve The Board, and our Investment net zero emissions by 2050. Committee, actively oversee how we Kate Jones are managing RI considerations. Over Chair of the Board We strive to use our in昀氀uence with the the year, we continued to be engaged asset management community and with the ESG developments and work tirelessly with our fund managers informed of our progress on activities to ensure we are well positioned for taking place throughout the investment the transition. portfolio. This is our second RI report and we are delighted to share our most recent activities and achievements Oliver Morley, in stewardship practices and other Chief Executive O昀케cer RI developments during the year.