05 Pension Protection Fund Climate Change Report 2022/23 Overview: Make every investment transparent and accountable The past 18 months have been challenging for everyone in the industry, with the onset of the war in Ukraine, the LDI crisis in Autumn 2022 and persistent high in昀氀ation. Among all of this, ESG and climate change remains at the core of our approach and strategy. Putting sustainability into action I’ve always 昀椀rmly believed in understanding That’s also why we’re so supportive of Setting new standards in responsible investing, leading by example and our risks, and doing so using evidence-based innovations looking to streamline ESG sharing our learnings to help others are at the heart of the PPF’s values. data. In last year’s Climate Change report, reporting, such as eFront’s ESG Outreach We’ve seen signi昀椀cant progress in our fund managers’ ESG practices, we introduced the Paris Portfolio Alignment project where the pilot has already delivered as evidenced by the growth over the last few years in the number of our Project that we initiated in partnership with actual emissions data for a number of our external managers who have become PRI signatories (90 per cent in 2022). Dutch consultancy Ortec Finance. We’ve been portfolio companies. The sooner we can use spending considerable time gathering climate our day-to-day systems to access emissions Collaborating with partners and others in the industry is fundamental to assessments across every asset class in the data for our private markets holdings, the our responsible investment strategy and we will continue to help de昀椀ne Fund so we can see how the Fund’s position more con昀椀dence we can have in making best practice. aligns to Net Zero and the Paris Agreement, investment decisions informed by our and we’ve continually evolved this to re昀氀ect portfolio alignment positioning. We will continue to push ourselves to further the sustainability of our new methodologies and changes in our investments, as well as minimising our environmental impacts in order portfolios. This has been helping us improve In December 2022, I was honoured to to achieve our target of reaching Net Zero for our operations by 2035 our understanding of ESG data and make receive the CIO Asset Owner Industry or sooner. more informed decisions about the portfolio, Innovation Award for E昀昀orts in ESG. This especially in our unlisted investments where award recognises asset owners driving pre-investment due diligence is even more change within their allocation approaches Oliver Morley critical. We’re encouraged to see the progress and enhancing institutional fund performance. Chief Executive already made on the Fund’s alignment since I and the whole PPF investment team will 2020, as more companies have committed to continue to look to lead on best practice setting science-based targets and have started in understanding the climate risks of every to share their transition plans with investors. investment we hold both now and in the future. Gathering this additional data has been crucial to us. However, the sheer speed of change Barry Kenneth surrounding ESG continues to keep us on Chief Investment O昀케cer our toes and is one of the reasons I use a lot of data internally, through our portfolio management systems, so that we can directly monitor our portfolios on a real-time basis.