15 Pension Protection Fund Responsible Investment Report 2020/21 ESG integration continued Monitoring our managers Driving transparency We continuously monitor our managers’ across our portfolio We’re pleased to report that 100 per progress through regular reports on cent of our managers of publicly stewardship activities, ESG-related risks traded assets are reporting under this and climate-related information. When We expect our external managers to we raise issues with speci昀椀c managers, new framework now, so we have we report this to the Investment in昀氀uence issuers, regardless of asset oversight over: Committee. class, and update us on their actions. This includes engagement and taking Our fund managers are also assessed part in collaborative initiatives, and by the ODD team, who we work with to being transparent about voting where ensure that ESG considerations are part we have ballots. ESG policy compliance during the quarter, of the appointment and reviews of fund We regularly carry out in-depth reviews including identifying and managing material managers. We screen for reputational of their activities to assess how they’re ESG risks risks and are now implementing engaging on our behalf and particularly diversity and inclusion metrics in the scrutinise votes on our key themes of Stewardship activities during the quarter, annual ODD questionnaire. This will climate change, diversity and inclusion, including engagement and voting allow us to capture the information we Board governance and executive need to help drive diversity in the remuneration. investment industry. ESG portfolio pro昀椀le However, more can be done, so we’re continuing to drive transparency across TCFD climate assessment of the portfolio our portfolio. Taking action: This year we worked extensively with our Liquids managers to develop dedicated reporting Implementing diversity templates that will give us insight and inclusion metrics into essential ESG, climate and in the annual ODD stewardship data across our Liquids portfolios. This will allow questionnaire will our dialogue with the managers to Improving portfolio Our Liquids managers allow us to capture the be more targeted, and enable us management systems are now preparing to to report our own stewardship Over the past year, we’ve also worked closely information we need to progress. with our service providers to get easier access to share additional help drive diversity in ESG and stewardship data across our systems. metrics in early 2022, the investment industry. Our Liquids managers are now particularly in the area preparing to share additional metrics in early 2022, particularly in the area of of more advanced more advanced TCFD climate analysis. Taking action: TCFD climate analysis. We’re also rolling out the reporting We’ve created speci昀椀c templates in our process to our Alternatives fund portfolio management system so that we managers and we aspire to have appropriate templates in place across can quickly run self-serve reports and the book by 2022. regularly assess a portfolio for ESG risks ahead of a manager review meeting. We believe that this engagement with As it’s still di昀케cult to get exactly what we our fund managers has increased need, especially in private markets, we’re their awareness of potential ESG continuing discussions with software risks, particularly climate-related. providers to 昀椀nd ways to enhance We also believe that it has already their platforms so we can monitor led to a signi昀椀cant impact on the developments across more of our Fund. risk pro昀椀le of our managers.