13 Pension Protection Fund Responsible Investment Report 2021/22 OUR PURPOSE AND GOVERNANCE CONTINUED If there is a con昀氀ict of interest when it comes to speci昀椀c Reviewing our processes and Taking action decisions, we include provisions for declaring interests at assessing their e昀昀ectiveness Board and committee meetings. Our stewardship programme is subject to internal and Improving our process on split votes In practice, we approached our internal Levy teams to external review, and is overseen by the Investment During the year, our robust review process meant we inform them of our participation in the PRI’s FTSE 350 Committee. Policies, approaches and outcomes are became aware of certain high-pro昀椀le shareholder modern slavery initiative in advance of engaging with presented quarterly to the committee with action points votes in which the vote direction of our external the companies. We did this as we were aware that some recorded. Regulatory developments are monitored to investment managers di昀昀ered from one another. of the companies in question were levy payers. ensure that emerging themes and potential regulatory We have since established a process to identify and expectations are evaluated. Externally, we participate in evaluate signi昀椀cant votes internally and then ensure Externally-managed assets the PRI’s annual transparency reporting and assessment that our desired vote direction is implemented Regarding stewardship of assets managed externally process, which provides external validation on our RI consistently across each of our external investment on our behalf, we expect our external agents to identify and stewardship processes. We also confer with our managers and our stewardship services provider, EOS. and manage any con昀氀icts of interest in accordance peers and industry stakeholders on a regular basis and We do not expect this process to fully eradicate with Principle 3 of the FRC’s UK Stewardship Code 2020, share our practices through these forums. situations in which our votes are split, although a putting the best interests of clients and bene昀椀ciaries 昀椀rst. signi昀椀cant reduction in these instances is expected. Con昀氀icts of interest policies are reviewed as part of our Currently, the PPF Internal Assurance team does not appointment of any fund manager through our operational explicitly review the work undertaken by the ESG team. due diligence (ODD) assessments. Our expectations are However, in relation to external manager selection, explicitly referenced within our investment management pre-investment sign-o昀昀 must be provided by the ESG agreements and side letters (see Appendix D and G for team and this is then reviewed by the Operational Due Managing con昀氀icts of interest example terms, including 1.4 and 1.8.4). This includes a Diligence team and the Asset & Liability Committee requirement for our managers to attest that they have before any investment can be approved. Con昀氀icts of Interest policy adhered to our policies and expectations on a quarterly basis. The ESG team undertakes an annual review of EOS’s The PPF has a Con昀氀icts of Interests Policy (see Appendix C) Con昀氀icts are also considered by our stewardship services services, as the principal external stewardship services to identify where a con昀氀ict of interest may arise and how provider EOS when undertaking voting and engagement provider. A summary of this review is then provided to con昀氀icts should be monitored and managed. We’re committed on our behalf. Although we reserve the right to amend the Investment Committee. We are currently reviewing to conducting business and our investment activities in the any votes proposed by our agent, and to this end review the need for a structured internal audit or external best interests of our bene昀椀ciaries, and have comprehensive voting proposals ahead of AGMs, we are satis昀椀ed that assurance of the ESG and stewardship activities and an controls across the organisation to prevent con昀氀icts of interest our voting and engagement agent has suitable expertise, update will be provided in the next reporting round. from a昀昀ecting them. We place individual accountability high policies, research and resources to carry out stewardship up on our cultural agenda, and it is one of our core values. All activities on a day-to-day basis on our behalf. Therefore, This Responsible Investment Report has been reasonable steps must be taken to prevent potential or actual where con昀氀icts of interest arise, we adopt an arm’s length approved on behalf of the Board by the Chair of the con昀氀icts of interest, or situations that might be perceived as approach and aim not to in昀氀uence or override the voting Board and signed by the CEO following review by giving rise to a con昀氀ict of interest. Under the policy, our sta昀昀 decision of our agent. members of the Board and Executive Committee. It are required to disclose any interest in any company, or other is informed by ongoing reporting throughout the entity, in which the PPF has an ownership interest. EOS takes steps to avoid con昀氀icts of interest between year to the Board, Investment Committee, Asset and Recording con昀氀icts us and any other clients, and between us and EOS or its Liability Committee and monthly updates to the Chief a昀케liates, and comply with our Con昀氀icts of Interest Policy. Investment O昀케cer and Head of Investment Strategy. Details of con昀氀icts and noti昀椀cations are recorded in the EOS noti昀椀es us without undue delay of any con昀氀ict of Con昀氀icts Register which is maintained by the Compliance interest or potential con昀氀ict of interest of which it becomes and Ethics team. We also have other related policies such aware or to which it may be subject and the implications as a Code of Conduct & Conduct Rules Policy (for both of such con昀氀ict of interests for the Board. Read more about employees and our suppliers), a Handling Non-Public how EOS approaches con昀氀icts of interest here. We place individual accountability Information Policy and a Personal Account Dealing Policy. In practice, over the year EOS has provided transparency of high up on our cultural agenda, Our non-executive Board members may hold other director potential con昀氀icts of interest in their communications to us positions, or have connections with external fund managers. relating to their voting recommendations for a company and it is one of our core values. We share all Board members’ outside interests on our website, that might be one of their clients (or a昀케liated with a client and update any Board expenses quarterly on the website. of EOS or Federated Hermes).