Pension Protection Fund Responsible Investment Report 2020/21 6 Chief Investment O昀케cer’s foreword Our investment strategy is focused on delivering sustainable long-term returns, and RI is a core component of this. Through the three key priorities of our RI strategy – climate change, stewardship and reporting – we seek to reflect the importance of these issues in the broader context of the investment world. This year we are publishing our 昀椀rst Transparency is key to enabling us detailed Task Force on Climate-related to perform our oversight duties, Financial Disclosures (TCFD) report so we now require our external alongside this RI report. We’ll also managers to complete comprehensive continue to include a summary of our reporting templates to improve our climate disclosures in our Annual Report understanding of ESG and climate and Accounts. risks in our portfolios. This has not been a simple task. It required During the year, we chose to amend many months of engaging with and our Statement of Investment educating our managers to design Principles (SIP) to address the evolving relevant templates for their strategy. Barry Kenneth, Chief Investment O昀케cer expectations of asset owners around RI and stewardship. Our newly In the past year, we’ve also worked hard approved stewardship policy builds with our service providers to update our on these principles and further details portfolio management systems with the our commitment to engaging with ever-expanding ESG and carbon data We want to keep raising our external managers and working and analytics available. These combined collaboratively with industry partners. e昀昀orts have improved our ability to the bar, not only for monitor, report on and ultimately ourselves but also for We also progressed the implementation manage these risks and opportunities. of our climate strategy, by developing those we choose to a new climate-aware version of our We’ll continue to mandate more equity benchmark. We 昀椀nalised this work with. fund-speci昀椀c ESG reporting from our with our index provider, FTSE Russell, managers. It is still challenging to gather in March 2021. Our expectation is this information, especially in less that it will considerably reduce the traditional strategies, but we actively Barry Kenneth climate risk pro昀椀le of our equity support our managers’ development. portfolio, while still delivering the Chief Investment O昀케cer We hope this will also bene昀椀t other fundamental characteristics we seek. asset owner clients. We have seen great progress from our Liquids managers in We greatly value the power of collective the past year and are now rolling out engagement to address systemic risks. the templates to cover our Alternatives One example is our continued portfolios in the coming year, starting membership and involvement in the with Real Estate. The quickly evolving work of the IIGCC. This includes regulatory landscape in relation to ESG supporting the ongoing Climate Action matters continues to drive reporting 100+ initiative as well as participating in practices forward and we remain working groups developing the Paris committed to evolving our strategy and Aligned Investment Initiative (PAII) and risk processes to stay ahead of the investor expectations on physical risks. market dynamics. Barry Kenneth Chief Investment O昀케cer