Pension Protection Fund Responsible Investment Report 2020/21 22 Engagement continued Key activities in public policy We engage with key entities globally on Other collaborations with industry • Although we’re committed to voting engagement over the year public policy that promotes and enables • We’ve been a signatory to the PRI all our shares, implementing policies Regulatory standards and guidance smooth market functioning. We carry since 2007; our Head of ESG currently – particularly in relation to pooled around ESG issues are rapidly evolving out this engagement directly or through sits on the PRI’s Infrastructure funds – is challenging, and improving and we follow these developments other groups such as our stewardship Advisory Committee and we’re shareholder voting is an important closely. provider, the PRI and the IIGCC. members of its Collaboration platform issue • As an investor member of the IIGCC, we recently joined its Net Zero Taking action: Stewardship Working Group. We also Taking action: participate in its collective responses Taking guidance from the newly Directly Through EOS to consultations, such as with the formed Taskforce on Pension TCFD on its forward-looking metrics Scheme Voting Implementation, DWP consultation: Taking action on In the past year we’ve been glad to proposal we’ve successfully agreed with climate risk – we responded to this see the results of engagement on • We encourage greater climate two of our public equity managers as we believe introducing Japan’s Corporate Governance disclosure through supporting initiatives to apply a split-voting approach standardised climate metrics is a Code revision. This included such as the CDP and the TCFD and the option to override votes crucial step to being able to development around Japan’s with our decision. measure climate alignment across sustainability disclosure and • We are supportive of the revised UK strategies. progress on the National Action Stewardship Code and its increased • The EU’s Sustainable Finance Plan on Business and Human drive towards greater transparency on Disclosure Regulation (SFDR) is a DWP consultation: Consideration Rights. In the UK, we provided stewardship activities and progress positive move towards transparency of social risks and opportunities input to the FRC on future and standardisation, which should – we responded to this as we corporate reporting and the Asset bene昀椀t asset owners such as already consider social factors Management Taskforce for ourselves. A growing number of our where material, for example stewardship. managers are aligning their reporting diversity and inclusion. with this regulation, for funds We also engaged with the UK’s classi昀椀ed under articles 8 and/or 9. HM Treasury consultation: Reform Home O昀케ce review of the Modern The coverage of assets committed of the RPI methodology – we Slavery Act information portal, varies, however with time we expect submitted a direct response to the under development, that would a larger share of mandates to adopt consultation during the year, allow the public to search for some ESG guidelines. expressing our views around companies’ modern slavery potential impacts to the PPF and statements. other DB schemes. Although our liabilities are indexed by reference to Net Zero Stewardship the Consumer Price Index (CPI), the Through the IIGCC absence of a liquid CPI market As a member of the IIGCC’s Net Zero means we largely use the RPI-linked As active members of the IIGCC, we Stewardship Working Group, we’re Gilt and RPI derivative markets to often join collaborative initiatives helping create practical approaches hedge our liabilities against in昀氀ation to help asset owners to engage on public policy. In the past year risk. The e昀昀ectiveness of this we signed the Global Investor around carbon emissions. There are strategy is important to our long- Statement, now supported by 587 two main workstreams: term viability and to limit calls on our investors managing $46 trillion, levy payers. urging all governments to raise their • Developing the resources and climate ambition and implement infrastructure that investors need robust policies by COP26 in to engage and exercise voting November 2021. rights with priority companies • Creating a framework that can hone engagement targeted to net zero. We also monitor the e昀昀orts of proxy voting providers to include clients’ needs, particularly around climate risk management