17 Pension Protection Fund Responsible Investment Report 2020/21 Engagement continued Engagement in hybrid and Our public hybrid assets and strategic 12 out of 19 strategic cash assets cash books have reasonable ESG and companies with We take a nuanced approach within our carbon data coverage within our Taking action: hybrid assets, depending on whether portfolio management systems. Over the year, we also brought speci昀椀c objectives they are private or public. We can use these to monitor the our UK Public credit and cash in our internally portfolio regularly, along with assets under the remit of the Our private assets are typically held assessments from open-source engagement services from our managed 昀椀xed for the long term and often have very initiatives. For example, being an external stewardship provider, EOS, income holdings saw little secondary market liquidity. This investor member of Climate Action 100+ as part of the expanded contract. makes due diligence – including ESG has helped us understand the transition identi昀椀able progress assessments and issuer engagement – plans of European energy corporates during the year. critical at the pre-investment stage. when reviewing their debt instruments Enel SpA for inclusion into our portfolio. An example was Enel, a Climate EOS identi昀椀ed 74 engagement Action 100+ company, where EOS objectives or issues to engage on across Taking action: 35 companies in the portfolios last year. set a speci昀椀c objective to encourage Over the last year, we have the company to acknowledge declined a number of deals due to the need for phasing out coal 12 out of 19 companies with speci昀椀c power generation. This objective extreme governance concerns objectives saw progress on those progressed to the next milestone in with an issuer or uncertainty objectives during the year. December 2020 when the company about future earnings from particular industries over the con昀椀rmed it had developed a phase-out plan, and was con昀椀rmed long term. as completed in January 2021, when the company updated its coal phase-out timeline, committing to a coal-昀椀red power asset closure schedule by 2027 instead of 2030. Case study Monmouthshire social housing deal In 2021 we directly invested has published a comprehensive in re昀椀nancing debt for the environmental policy. Monmouthshire Housing Association (MHA) loan portfolio. The Welsh Government’s The MHA was established in 2008 decarbonisation target by 2030 to provide and manage a昀昀ordable presents a challenging opportunity homes for people who need them. to the real estate sector in It also helps make sure that homes meeting these targets. Therefore, meet and are maintained to the the MHA has been developing a Welsh Housing Quality Standard. comprehensive business plan that outlines potential costs around The MHA manages and maintains energy e昀케ciency measures and around 3,600 homes and 270 capital expenditure for achieving leasehold properties, garages and carbon savings. We are monitoring land around and within its estates. closely the progress of the MHA It’s committed to managing its in setting and achieving carbon housing stock in alignment with reductions alongside providing environmental standards and a昀昀ordable social housing.