36 Pension Protection Fund Climate Change Report 2022/23 Setting aspirational targets Every year, we look to use the 昀椀ndings that come out of the analysis for our TCFD reporting to see how we might improve how we monitor, manage and reduce the carbon emissions connected to our investments and organisational activities. This year we have set some formal targets to re昀氀ect our ambition. Climate-related KPIs for Our key climate-related targets are: 2. Continue t o source 100 per cent of our purchased 1. Ensur e at least 80 per cent of our Climate Watchlist electricity for our o昀케ces through renewable tari昀昀s Areas we can control 2023/24 昀椀nancial year companies are making disclosures on emissions, each year. The PPF is committed to acting responsibly and with a view to standardising how this is reported. Bot h of our UK o昀케ces were moved to 100 per cent transparently, while generating a good, risk-based renewable electricity tari昀昀s in October 2019 and we Scope 1 Scope 2 investment return to meet the needs of our members and As mentioned ear lier, we are extremely supportive of monitor this annually to ensure this continues. The stakeholders. We have chosen to focus our targets on those the CDP as a global corporate disclosure mechanism same goes for our data centres. Direct emissions Indirect emissions areas that are most important to us and where we believe o昀昀ering standardised reporting for climate change and of owned/ from generation of we can make the biggest di昀昀erence. we strongly encourage our investee companies to report 3. W ork towards achieving Net Zero for our operations operated assets purchased energy in their annual disclosure campaign. by 2035. Through our Sustainability Strategy, we have identi昀椀ed • Building some key performance indicators (KPIs) for 2023/24 that Of our Climat e Watchlist, 84 per cent of companies W e are committed to supporting the UK Government’s are directly linked to our four sustainability goals to help participated in CDP’s 2022 Disclosure process. We are Net Zero by 2050 target and are taking all reasonable management us measure our progress and enable our stakeholders to pleased to see a good level of initial disclosure from steps as an organisation to achieve this for our own hold us to account. Initially, however, a lot of our work will many of the highest emitters in our portfolio. However, operations by 2035 or sooner. Areas we can in昀氀uence focus on developing processes and improving transparency we also recognise that some of these disclosures are not before we can start to see the impact of our activities. meeting the full standard of CDP reporting as yet, so we W e have already achieved Net Zero for our operational Our sustainability goals are supported by more speci昀椀c will be actively encouraging these companies to improve Scope 1 and 2 emissions, with no emissions arising from objectives or milestones for each team. their reporting. fossil fuel use. So our focus going forward will be on Scope 3 what we can do to achieve Net Zero in our Scope 3 operational supply chain and travel emissions. Scope 3 Indirect emissions from rest of 昀椀nanced emissions from our Investments will be value chain activities considered separately. Ac hieving this depends on our level of control and Operational Financed in昀氀uence with stakeholders. We have reasonable • Procurement & • Investments control over our direct emissions (Scope 1 and Scope supply chain 2), but we can only in昀氀uence our indirect emissions • Travel (Scope 3) to a degree. For example, we can only reduce emissions across our supply chain and investments if our suppliers and portfolio companies or issuers reduce their own emissions or otherwise contribute to the global transition to Net Zero. W e have chosen 2035 as our target Net Zero date because we believe that it provides a reasonable timeframe for advancements in both data transparency and technological solutions. Our preference is to reduce emissions as much as possible. Therefore, we will only consider using high-quality carbon o昀昀sets to o昀昀set those emissions we cannot reduce.