10 Pension Protection Fund Responsible Investment Report 2021/22 OUR PURPOSE AND GOVERNANCE CONTINUED Our governance structure and activities Strong governance, with clear oversight, responsibility and accountability, is key to delivering on our RI strategy as well as our overall long-term investment objectives. Teams at every level of our governance structure have been highly active this year in helping to advance greater transparency on the sustainability of our portfolio investments, strong stewardship across our assets, and productive engagement with the companies and issuers we invest in. Function Roles & responsibilities Taking action: RI activities in 2021/22 PPF Board Highest governing body with Approved our new voting Discussed in detail the RI Undertook training to expand More training scheduled oversight for responsible investing guidelines in March 2022 activities and progress taking the Board’s knowledge of in 2022/23 around our (RI) and stewardship activities (see Appendix E) place throughout the year, climate change risks and how sustainability strategy (including climate-related) including outcomes from the these can be monitored and transition to a new lower-carbon managed through engagement equity benchmark and the Paris and voting Portfolio Alignment Project Investment Responsible for developing and Approved the update to our Reviewed the RI report ahead Our RI and climate-related Undertook the triennial review Committee maintaining the PPF’s RI and Climate Change Policy in of submission to the FRC, and activities and progress were of our Manager Selection stewardship principles and policies December 2021 (see page 11); reviewed the TCFD report reported on and discussed at Framework, including approving (including climate-related) reviewed and approved our four IC meetings during the our recommendation to carve Stewardship Policy and the year, ensuring the committee out a more explicit ESG score new voting guidelines in had regular oversight on March 2022 implementation of our policies Investment team Led by the CIO, responsible ESG reviews of the portfolio ESG and climate assessments A number of teach-ins held with In-house portfolio managers PPF shortlisted in November for ensuring adherence to the discussed with our CIO and continued to be formal in-house portfolio managers, given access to more ESG and 2021 for the Pensions for RI Framework, stewardship Head of Investment Strategy components of all investment including dedicated workshops climate-related resources from Purpose Paris Aligned Award for principles and associated policies through monthly dashboards due diligence and manager on the Paris Portfolio Alignment external providers through our the Best Climate Governance across all asset classes whether monitoring processes Project for each desk investment risk systems and Strategy Statement internally or externally managed ESG team Part of the Investment Developed our new voting Provided updates in the daily Saw our dedicated ESG Reviewed all managers Our Head of ESG was one of team, helping to oversee guidelines during the year Investment team meetings resourcing expand with the and stewardship provider the 昀椀rst participants to sit the implementation of the RI on ESG issues and trends addition of an ESG data analyst at least annually CFA’s pilot of its new Certi昀椀cate Framework, monitor investments throughout the year to help streamline and improve in Climate and Investing for ESG risks and opportunities, e昀케ciencies within our ESG quali昀椀cation and was awarded engage with portfolio managers, data management the certi昀椀cate in early 2022 external managers and our stewardship services provider Asset Managers Follows the PPF’s RI Framework Asset Managers Stewardship Services Provider* and Stewardship and stewardship policy, Having rolled out our quarterly To improve disclosure from We further consolidated our For pooled equity funds, we Services Provider* undertakes ESG integration and ESG reporting templates our Alternatives managers, voting processes by bringing have a split voting set-up issuer engagement then reports for Liquids managers last we encouraged a number more under the remit of EOS, that allows us to override on * EOS at Federated Hermes. transparently and accordingly year, these managers are of managers to join the giving us better oversight of signi昀椀cant votes which we now required to report on ESG Data Outreach project our voting decisions have used during the year an expanded range of TCFD initiated by eFront (see more metrics for portfolios on page 21)