Strengthening Our investment Escalation Message from Key highlights our stewardship Our progress Our purpose approach and Our approach and exercising Our aspirations for 15 Pension Protection Fund Responsible Investment Report 2022/23 our Chair of the year commitment at a glance and governance incorporating ESG to engagement shareholder rights the coming year Appendices OUR PURPOSE AND GOVERNANCE CONTINUED Managing con昀氀icts of interest Our expectations are explicitly referenced within our investment management agreements and side letters Con昀氀icts of Interest policy (see Appendix D and G for example terms, including The PPF has a Con昀氀icts of Interests Policy (see Appendix C) 1.4 and 1.8.4). This includes a quarterly requirement for to identify where a con昀氀ict of interest may arise and external managers to con昀椀rm that they have adhered to how con昀氀icts should be monitored and managed. We’re our policies and expectations. committed to conducting business and our investment Con昀氀icts are also considered by our stewardship services activities in the best interests of our bene昀椀ciaries, and have provider EOS when undertaking voting and engagement comprehensive controls across the organisation to prevent on our behalf. Although we reserve the right to amend any con昀氀icts of interest from a昀昀ecting them. We place individual votes proposed by EOS – and also to review voting proposals accountability high up on our cultural agenda as one of our ahead of AGMs – we are satis昀椀ed that EOS has suitable core values. All reasonable steps must be taken to prevent expertise, policies, research and resources to carry out daily potential or actual con昀氀icts of interest, or situations that stewardship activities on our behalf. Where con昀氀icts of might be perceived as giving rise to a con昀氀ict of interest. interest arise, we adopt an arm’s length approach and aim Under the policy, our sta昀昀 are required to disclose any not to in昀氀uence or override EOS’s voting decision. interest in any company, or other entity, in which the PPF has an ownership interest. EOS also takes steps to avoid con昀氀icts of interest between us and any other clients, and between us and EOS or its Recording con昀氀icts a昀케liates, and comply with our Con昀氀icts of Interest Policy. Details of con昀氀icts and noti昀椀cations are recorded in the EOS noti昀椀es us as soon as possible of any con昀氀ict of interest, Con昀氀icts Register which is maintained by the Compliance or potential con昀氀ict of interest of which it becomes aware or & Ethics team. We also have other related policies such to which it may be subject, and the potential implications as a Code of Conduct and Conduct Rules Policy (for both for the Board. Read more about how EOS approaches employees and our suppliers), a Handling Non-Public con昀氀icts of interest here. Information Policy, and a Personal Account Dealing Policy. In practice, EOS has been highly transparent regarding Our non-executive Board members may hold other director potential con昀氀icts of interest relating to its voting positions, or have connections with external asset managers. recommendations for companies that might be an EOS We share all Board members’ outside interests on our clients (or a昀케liated to a client of EOS or Federated Hermes). website, and update any Board expenses quarterly on We did not have a situation during the year where we felt the website. a con昀氀ict of interest had a negative impact on a decision If there is a con昀氀ict of interest when making a speci昀椀c involving PPF assets. decision, we include provisions for declaring interests at Board and committee meetings. For example, we Taking action approached our internal levy teams to inform them of our participation in the PRI’s FTSE 350 modern slavery initiative in advance of engaging with companies. We did this as we The ODD team refreshed their due diligence for one were aware that some of the companies under assessment of our existing private equity managers as part of by the PRI initiative were PPF levy payers. the team’s ongoing monitoring programme. Whilst on-site, the team identi昀椀ed a potential con昀氀ict of Externally-managed assets interest in relation to the compliance activities being Regarding stewardship of assets managed externally undertaken by a member of the investment team. on our behalf, we expect our external agents to identify Weaknesses were also identi昀椀ed in the 昀椀rm’s anti- and manage any con昀氀icts of interest in accordance with money laundering/know your client programme as Principle 3 of the FRC’s UK Stewardship Code 2020, putting it did not include a risk-based, dynamic re-screening the best interests of clients and bene昀椀ciaries 昀椀rst. protocol for the investor base. Both points were fed back to the manager while on-site and subsequently Con昀氀icts of interest policies are reviewed as part remediated through the transfer of CCO duties to the of our appointment of any fund manager through CFO and the introduction of an ongoing KYC/AML our operational due diligence (ODD) assessments. screening protocol.