09 Pension Protection Fund Climate Change Report 2021/22 GOVERNANCE AND ACCOUNTABILITY CONTINUED Putting sustainability at the Strengthening our Our RI framework puts our core beliefs into practice: heart of our business strategy stewardship commitment The PPF is committed to driving best practice in We view stewardship as one of the most powerful ways Responsible Investment Framework sustainability as an organisation. This year we launched a we can drive companies to transform their climate impact, new Strategic Plan for 2022–25. Re昀氀ecting our strategic generating real world decarbonisation. In March 2022, we Strategic priority on ‘making a di昀昀erence’, this includes commitments were accepted by the Financial Reporting Council as a Governance & direction Risk Metrics & to develop a holistic sustainability strategy, to set the signatory to the UK Stewardship Code 2020, recognising accountability & policy management transparency standard in our approach to responsible investment and to our e昀昀orts in responsible investment and the strength of reduce our own environmental footprint as an organisation. our new Stewardship Policy. To support our holistic sustainability strategy, we are Escalating our engagement through climate-related voting Priorities forming a Senior Leaders’ Steering Group for interested is also a critical element of our stewardship activities. We non-executive and executive committee members to drafted new voting guidelines during the year to inform our provide input and direction as work progresses. We are voting decisions in the 2022 AGM season. The guidelines also creating internal working groups to address speci昀椀c summarise situations where the PPF will consider voting Climate Change Stewardship Reporting development and implementation initiatives. against management on issues relating to climate change, modern slavery and D&I – see Appendix F for guidelines Updating our climate policy related to climate change. We have selected these topics to re昀氀ect our own focus areas as an organisation. Climate & sustainability Next steps We also consolidated our voting processes across our policies & strategies di昀昀erent equity mandates further to provide greater oversight and consistency – see the ‘Activities by Climate stewardship By 2023 we will establish a baseline of the governance function’ panel above for more detail. PPF’s own environmental impact, and propose Climate risk a sustainability strategy and targets to reduce Being open about what we can do assessments & our impacts over the period to 2025, re昀氀ecting We are pragmatic and transparent about doing what we sustainability best practice standards. can around governance and oversight of climate change reporting in relation to our investments. We recognise that some elements may currently be too costly or too di昀케cult to Climate implement in their entirety. But we continue to monitor the opportunities Since the release of the IPCC special report in late 2018 landscape and work with fund managers, regulators and describing the additional negative impacts caused by 2°C other industry actors to progress best practice, particularly warming compared to 1.5°C warming, global focus has on metrics and reporting initiatives. Where assumptions shifted overwhelmingly to e昀昀orts to limit warming to 1.5°C. have been made, or limitations faced in our assessments, We are now starting to see this re昀氀ected in available climate we are open about this. scenarios, including the International Energy Agency (IEA)’s newer 1.5°C scenario released last year. Accordingly, we have aligned our climate policy with this greater ambition, referencing climate-related scenarios seeking to limit global warming to 1.5°C rather than 2°C (see Appendix B for our updated policy).