37 Pension Protection Fund Responsible Investment Report 2021/22 APPENDICES CONTINUED Appendix F 6. What escalation processes do you have in place for Appendix G 1.5. The Bo ard has put in place a responsible investment Stewardship section of our ESG situations of continued underperformance on the Our standard RI external manager policy, addressing controversial weapons, company engagement objective? Please give two recent examples conduct and sovereign bond exposure detailed Questionnaire of where this has occurred in practice. contract terms further below: Our ESG Questionnaire is a scored mandatory list of 7. Please also describe in detail your approach to 1.1. The Fund P arties acknowledge the importance that the 1.5.1. The Bo ard will expect companies that are directly questions that prospective investment managers must voting shares, and whether your voting actions are Board places on principles of corporate governance involved in the production of anti-personnel landmines, answer on a pass/fail basis to progress through the tender determined internally or outsourced to a proxy voting and responsible investment. The Fund Parties agree to cluster weapons, chemical weapons and biological process. Below is a sample list of questions within the agency. If the latter, do you ever override the agency’s give appropriate consideration to the relevant principles weapons and of essential components of these Stewardship section of the questionnaire. recommendations? Please give a recent example. which may include the Principles for Responsible weapons to be excluded from its investment universe. 8. How do you approach ESG and climate-related ballot Investment, to which the Board is a signatory. The Fund 1. Ar e you a signatory or do you intend to apply for items in your voting decisions? Have you voted against Parties acknowledge that they have received, read 1.5.2. The Board will expect the Fund Parties to exclude from signatory status to the revised Stewardship Code in management and/or 昀椀led or supported shareholder and understood the Board’s Statement of Investment the investment universe sovereign bonds issued by 2020, or other national stewardship codes? Yes/No resolutions on ESG or climate issues? If so, please give Principles. The Fund Parties acknowledge the Board’s countries subject to complete UN arms embargoes an example of where you have done this, and your need to consider long-term and systemic risk factors in which the UK supports. a) If you are not a signatory to the Stewardship Code, rationale for doing so. order to manage risks which are relevant to its long-term please provide rationale. 1.5.3. The Fund P arties acknowledge the Board’s interest 9. How do you overcome challenges such as shareblocking investment horizon and its statutory responsibilities. in investee companies making all reasonable e昀昀orts 2. Please exp lain how active ownership practices, markets or stock lending procedures when looking to 1.2. The Fund P arties will have a process for monitoring to abide by the UN Global Compact and the OECD such as company engagement, are integrated into exercise your votes? current or potential investments in relation to relevant Guidelines for Multinational Enterprises and that the investment decisions. 10. What customisation do you o昀昀er to clients on voting long-term factors including environmental, social and Board expects its managers to assess the signi昀椀cance 3. H ow do you set objectives, measure progress and report decisions, can clients retain votes to determine in line governance (ESG) and climate-related concerns. The of risks and opportunities in relation to their fund’s on the outcomes of your engagement with issuers on with their own policies? Please also describe the fund- Fund Parties will ensure that their sta昀昀 apply due care investments. Such assessment may include, where ESG issues? speci昀椀c reporting on all voting that you provide. and diligence to implementing this monitoring process, applicable and appropriate, the consideration of the 11. Please describe what engagement activities you including considering the extent to which such factors above guidelines. The Fund Parties will assist the Board 4. H ow do you encourage better disclosure from carry out from a policy, market-functioning or generate investment risks or opportunities. as is reasonably necessary to manage reputational risk corporates, especially regarding climate risks? industry perspective. and/or investigations that may arise from individuals 1.3. The Fund P arties will, in accordance with the Board’s investments made where investee companies fail to 5. F or what percentage of investments (by value, over the commitment to responsible ownership set out in its abide by the above guidelines. Such assistance may last year) have you undertaken engagement on climate Statement of Investment Principles, engage in such include the sharing of the investment research or, in change, environmental, social and governance issues? activities as are appropriate in the circumstances to the extreme, divestment or future segregation of pro昀椀t monitor and in昀氀uence the management of the issuing or loss relating to any investment for which material – If percentage > 0, please provide detail on processes entities and other underlying assets, where such reputational issues arise; (e.g. on monitoring processes, engagement strategy) activity is considered by the Fund Parties to be likely by engagement topic. to enhance the value of such securities and in the best 1.6. In respect of clauses 1.5.1 and 1.5.2 above, the – Please provide recent examples of such engagement 昀椀nancial interests of the Fund. Fund Parties will be provided with a list of excluded and your assessment of the e昀昀ectiveness of your companies and countries which may be updated by stewardship activities, e.g. instances of positive change 1.4. The Fund P arties will procure the exercise of any voting notice given in writing from time to time using the at issuers versus the level of in昀氀uence you had on rights attached to the Portfolio investments on the form speci昀椀ed in Annex A, signed in accordance with the issuer. Board’s behalf, in accordance with the Fund Parties’s the Board’s signing authorities. Such noti昀椀cations may voting policy and any market-speci昀椀c guidelines be sent via email containing a scanned pdf copy of the – If percentage = 0, please explain why engagement approved by the Board. The Board reserves the right instruction, sent to the Fund Parties to con昀椀rm (or such was not undertaken. to rescind, upon one day’s advance written notice, other email account as is noti昀椀ed by the Fund Parties to the Fund Parties’s authority to make voting decisions the Board in writing). for speci昀椀c companies, issues or time periods. The Fund Parties will use best endeavours to facilitate such Board voting decisions to be implemented. The Fund Parties will have in place appropriate policies to manage any con昀氀icts of interest in relation to voting matters and shall report at least quarterly on all votes involving companies where the Fund Parties or an a昀케liate has a contractual relationship or other material 昀椀nancial interest.