25 Pension Protection Fund Responsible Investment Report 2021/22 OUR APPROACH TO ENGAGEMENT CONTINUED Our issuer engagement progress EOS had another strong year of delivering engagement Progress on the 361 objectives by theme during the year and outcomes objectives. During the year, at least one milestone moved up in the milestone scale for 163 of the outstanding objectives. Environmental 72 67 Progress and outcomes from EOS-overseen assets The chart shown on the right describes how much progress has been made in achieving the milestone set for each In 2021, EOS engaged with 196 companies on 1,540 ESG engagement theme. Social and Ethical 43 33 strategy, risk and communication issues and objectives. Its holistic approach to engagement means that it 60 objectives were marked as complete during the year and Governance 57 38 typically engages with companies on more than one 38 objectives progressed to the next milestone or above. 52 topic simultaneously. were new objectives established during the year. Strategy, Risk and 26 25 Communication Engagement by theme Of the 198 objectives without progress during the year, % Progress on A summary of the issues and objectives on which our 92 were discontinued and 106 remained at the same objectives engaged 55% 45% stewardship services provider EOS engaged with companies milestone stage. in 2021 is shown below. Without progress With progress Engagement in UK Public Credit and Strategic Cash books Engagement progress in 2021 Of the 196 companies engaged by EOS during the year, EOS carries out engagement through a four-step process. As 52 companies were held in our in-house UK Credit and Examples of EOS corporate engagement on our behalf during the year shown on the previous page, it begins with raising a concern Strategic Cash portfolios during the year and over 80 per which it follows up diligently until it achieves a measurable cent of these were acted upon speci昀椀cally during this Alibaba in China Alphabet in the US outcome. The process can span quarters or even years. time period. This year saw EOS speak with the head of investor During an ESG investor call with Alphabet this year, the We provide a couple of examples of company engagements relations and the newly appointed ESG expert at tech conglomerate’s Chief Diversity O昀케cer reported that in these portfolios on page 19. China’s tech and e-commerce giant Alibaba – the 昀椀rst the company is working to increase inclusion, meet targets time the company has disclosed anything meaningful of 30 per cent representation of underrepresented groups on ESG since 2018. Alibaba has made some positive in leadership roles and double the numbers of black EOS engaged with 196 companies on Issues and objectives commitments on climate change and EOS asked for employees at all other levels by 2025. While grati昀椀ed by our behalf in the following regions by theme more detail about its targets to be Net Zero for Scope the company’s increased focus on diversity & inclusion, 1 and 2 emissions by 2030 and deliver a 50 per cent EOS will continue to scrutinise for meaningful cultural reduction in Scope 3 emissions. The company con昀椀rmed change. It plans to keep engaging the company on a it would consider incorporating ESG incentives into range of issues, particularly digital rights. executive pay. EOS continues to push for more disclosure Developed Asia 40 on digital rights and a review of the company’s score and Progressing: Australia and 3 Environmental 326 performance on the Ranking Digital Rights benchmark. • Diversity & inclusion disclosure New Zealand Social and Ethical 375 Progressing: • Demonstration of more inclusive culture EM & 24 • Human rights and business model 196 Frontier Markets 1,540 Governance 507 • Science-based target setting Europe 34 Strategy, Risk and 332 • Customer data protection & privacy Communication North America 76 • Ethical AI use & governance principles United Kingdom 19 • ESG reporting