Strengthening Our investment Escalation Message from Key highlights our stewardship Our progress Our purpose approach and Our approach and exercising Our aspirations for 30 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 APPROACH TO ENGAGEMENT CONTINUED Working with our investments to deliver climate goals Creating our Climate Watchlist This year, in line with the IIGCC’s Net Zero Stewardship Our Net Zero engagement process Toolkit’s guidelines, we identi昀椀ed our Climate Watchlist: 87 companies in material sectors that collectively are Undertake portfolio Achieve asset responsible for over 70 per cent of the 昀椀nanced Scope alignment analysis, set Set Net Zero alignment Develop an owner and Establish a baseline 1 and 2 emissions associated with our public markets alignment goals and criteria, alignment engagement manager alignment, engagement and investments. Signi昀椀cant work has been done to ensure levels and time bound strategy for priority voting policy, and the use case for the Climate Watchlist is robust and will develop a stewardship engagement objectives companies engagement and escalation approach enable us to make better decisions as to where to focus prioritisation framework transparency our engagement activities. Of these 87 companies – which are predominantly based in the US and Asia Paci昀椀c – there are already established Breakdown of Climate Watchlist engagement engagement strategies for 45 companies through the Climate Action 100+ (CA100+) investor initiative. A further 22 are targeted for engagement by EOS, our stewardship 70%+ 昀椀nanced services provider. We are now identifying the best options emissions* – for engaging with the remainder, whether directly or 87 companies through collaborations – for example, via our external asset managers. EOS engagement universe – 22 companies CA100+ list: 45 companies * Using Scope 1+2 emissions. In addition to engagement, we have recently developed an escalation strategy for the Climate Watchlist that can be deployed when engagements are either failing or The creation of our Climate Watchlist is a signi昀椀cant progressing too slowly. Financed emissions analysis of the PPF portfolio will be undertaken at least annually achievement, enabling us to hone in on the companies that to ensure our Climate Watchlist always holds the most will have a real impact on emissions reductions of the portfolio. relevant names. Page 38 provides more detail on the voting activities and progress related to climate issues. Daniel Jarman Stewardship Manager