20 Pension Protection Fund Responsible Investment Report 2020/21 Engagement continued Engagement in investment Our listed infrastructure grade credit manager recently It’s encouraging to see how engagement presented its analysis on practices have evolved within investment grade credit. We’re pleased climate scenarios to our that all of our managers in this asset investment team. class now report their stewardship progress to us regularly. We see engagement with debt issuers as having a longer-term focus, given their need to reissue debt on an ongoing basis, and one that is well suited to our investment pro昀椀le. Green bonds are an ever-growing share Engagement in private debt Our listed infrastructure manager of this asset class and we expect our managers to consider these as potential Case study We have been working with our has played a key role in integrating scenario analysis on climate-related investments if the 昀椀nancials or credit Promoting employee managers in this more challenging asset risks in its investment approach. risk 昀椀ts with their investment case. health and reducing class to increase their engagement However, transparency and assurance processes. We encourage them to It recently presented this to on the use of proceeds as well as plastic pollution provide us with information on progress our investment team through an continuous oversight are key to the and demonstrate the added value of informal training session. integrity and success of the green bond more stringent sustainability practices. market. We seek to invest in green One of our managers is a bond Engagement in private equity bonds that have at least a second After constant pressure, we’re opinion issued by a credible holder for a major UK retailer. Given the diverse nature of private independent body, as well as ensure It engaged actively with the pleased to report that nearly 90 that any relevant evidence is provided company throughout the past per cent of our alternative credit equity (PE) strategies, we take a year, focusing on crucial social assets are with managers who are nuanced approach to engagement on the green pro昀椀le. aspects due to the pandemic as now PRI signatories. This means within this asset class. Here, more than well as plastic pollution. they will need to meet the PRI’s anywhere else, we look to our managers minimum requirements, including to focus on the next link in the The company demonstrated TCFD reporting, but also gain investment chain. Taking action: reasonable resilience and access to education and networks Our interactions with general partners EOS, our stewardship provider, responsiveness in upholding for promoting best practice. (GPs) and expectations of how they expectations on employee health is also increasingly engaging with We have set this out as a clear engage with portfolio companies will Case study issuers from a debt perspective and bene昀椀ts over a challenging preference under our minimum di昀昀er from those we have with our on our behalf. During the year, year. It kept vulnerable sta昀昀 and requirements for all managers. secondary managers, and how they Building net zero carbon schools in Wales EOS engaged with a non-equity workers in self-isolation at home engage with underlying GPs. In terms of issuing Dutch 昀椀nancial institution with full paid leave at the outset control, we have greater expectations of the pandemic to minimise Engagement in infrastructure around stewardship where GPs hold We are keen to develop social It’s part of the Welsh 21st Century held in our long-term strategic health risks. infrastructure that goes beyond Schools Programme to meet the cash portfolio to encourage the We are pleased to note that Board seats or controlling stakes in housing. Through one of our growing demand for education companies. integration of climate change into The retailer also continues engagement e昀昀orts for this asset class infrastructure managers, we in the country. the bank’s strategy. The company to target more sustainable have made excellent progress, invested in the Welsh Education since published its 昀椀rst TCFD packaging by establishing a particularly around climate risks in listed During the year, one of our UK- Partnership (WEPCo). The facilities will be energy report and has started to focus closed loop for plastics. It has infrastructure assets. based GPs became a PRI signatory, its climate strategy on the worked with suppliers to remove meaning that 100 per cent of e昀케cient, built and maintained Through our investments, we aim to WEPCo will create schools and to high standards under a more exposed mortgage hard-to-recycle materials, with support the development of climate- our core PE managers are PRI other community-based facilities in ‘PassivHaus‘ net zero approach. and agribusiness areas of its industry-leading innovation to signatories. On the secondary create recyclable products, which resilient infrastructure that also adds side, many of our managers are Wales, from planning to 昀椀nancing, loan portfolios. help prolong the shelf life of social value. right through to maintenance. rapidly expanding their own goods and reduce food waste. The public-private partnership will monitoring of their sponsors’ create more than 30 new schools ESG practices, with increasing and colleges across the nation, with focus on TCFD reporting. We are an operation that will last 25 years. planning to roll out our ESG reporting templates to our PE managers shortly.