Pension Protection Fund Responsible Investment Report 2020/21 13 ESG integration continued Summary of our ESG integration approach The following table summarises our approach to ESG integration and stewardship across each asset class. Asset class Integration and stewardship approach Direct Liability Driven Investment • We engage with borrowers, primarily during reissuance or re昀椀nancing. Less in昀氀uence in sovereign debt, (LDI) although we engage on issues like LIBOR, Retail Price Index (RPI) and inaugural UK green gilts issuance (Managed in-house) UK Public Credit and Strategic • We engage with borrowers, more so around reissuance or re昀椀nancing cash • External stewardship provider also covers these portfolios for engagement services UK Private credit • We engage with borrowers, more so around reissuance or re昀椀nancing Indirect Listed Equities • Managers can exert in昀氀uence on companies through voting and engaging with company management. (Externally Approaches will di昀昀er depending on whether managers follow active, systematic or passive strategies • We re昀氀ect any concerns from our assessments in our voting and engagement approach. We also use intelligence managed) from engagements to inform our assessment • External manager monitoring Listed Credit: corporate, • Managers can engage with borrowers, more so around reissuance or re昀椀nancing – sovereign, emerging markets less in昀氀uence in sovereign debt (EM) Absolute Return • External manager monitoring • Managers can engage, but with limited in昀氀uence in strategies with shorter holding periods Real Estate • Managers with full control of assets can engage with tenants and local community • Continuous engagement on climate resilience Private Equity and • Managers can have direct engagement with companies or assets in primary funds, or with operating companies Infrastructure in infrastructure, especially if they have Board seats Private Credit • Managers can have ongoing dialogue with borrowers, but limited control over management Secondaries and Fund of • External manager/General Partner monitoring Funds