Strengthening Our investment Escalation Message from Key highlights our stewardship Our progress Our purpose approach and Our approach and exercising Our aspirations for 36 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 Escalation and exercising shareholder rights Company engagement is our principal tool for fostering greater social or environmental responsibility among the companies and other assets in which we invest. We primarily look to engage companies in a constructive, con昀椀dential manner. If this does not achieve the hoped-for outcome, we turn to escalation, including voting. How we approach escalation We commit to voting every share we hold, except when We are able to amend voting instructions directly on the and voting its cost is prohibitive or it is not possible to do so due to relevant manager/EOS voting platform. Where we disagree Taking action operational reasons (for example, due to share-blocking with a manager’s intended voting instructions, resulting in When we escalate issues markets or overly complex power of attorney requirements). the re-vote of our ballots, we will discuss the meeting with We look to be guided by best practice so our voting Generally, we aim to align with the voting policy of our the manager or engagement provider as appropriate. principles closely align with our stewardship services Escalation is an essential tool in the stewardship toolkit. appointed stewardship services provider EOS, but we still provider EOS’s global voting guidelines. For example Where private engagement with a company is not review voting recommendations for signi昀椀cant votes or Recognising the importance of voting our entire shareholding progressing at a su昀케cient pace, there are a range of high-pro昀椀le ballots. at certain contentious shareholder meetings, we are able to in 2023, for climate-related voting guidelines we potential escalation strategies that we, or our external recall lent stock when considered appropriate. This ensures increased the thresholds for the following measures: agents, can employ. These include: EOS, which acts as our voting overlay provider for the full weight of our holding is re昀氀ected at the meeting. Transition Pathway Initiative Management Quality segregated mandates, provides daily updates relating to During the year under review, no shares were recalled for score: All European and Australian companies in • collaborating with other investors or campaign groups; forthcoming shareholder meetings at which we are entitled the purpose of voting, although it was considered. all sectors scoring below Level 4; all coal, oil, gas, • issuing a public statement and/or publicly pre-declaring to vote. Starting last year, we now have direct oversight of utilities and automotive companies below Level vote intentions; and the voting execution across all our listed equity mandates. How we voted over the year 4 (vs. Level 3 for autos 2022); below Level 3 for all • 昀椀ling a shareholder resolution. These are assessed alongside our Climate Watchlist of The following tables and charts in this section detail our remaining sectors/companies in US and Asia and companies to determine which shareholder meetings voting activity for the period 1 April 2022 to 31 March 2023. Emerging Markets. Voting against board recommendations is an important and resolutions need to be reviewed by us internally. Our tool we can use when necessary as part of a thoughtful segregated mandates are instructed through the EOS voting Voting statistics April 2022 – March 2023 Climate Action 100+ Benchmark: Companies that escalation. However, we or our manager would try to service, and our pooled funds have been set up to enable have no medium-term targets in place as identi昀椀ed engage with the company at board or management level split voting for our allocation of shares. Together, this allows How many meetings did we vote at? 4,664 by indicator 3 of the Climate Action 100+ Benchmark. to discuss the issue in advance. us to exercise our voting power and ensure much greater How many resolutions did we vote on? 53,791 consistency in our strategy, especially for particularly If a company falls below the set criteria noted above, Where we feel engagement has not been fruitful over a important companies and issues. What % of resolutions did we vote on for which 99.4% we can review the shareholder meeting and determine reasonable period of time, we may vote against management we were eligible? how to vote on a case-by-case basis. on one or more resolutions, such as reports and accounts To ensure we participate in important shareholder meetings, or the election of individual board members responsible for we manage a watchlist of companies. This includes Of the resolutions on which we voted, what % 82.4% Our full voting guidelines can be found in Appendix E. poor governance, environmental or social performance. companies that are: on our Climate Watchlist; 昀氀agged on did we vote with management? our United Nations Global Compact controversies watchlist; Ultimately, selective divestment may be the outcome are being engaged by the PPF as part of either a collective Of the resolutions on which we voted, what % 17.6% of a failed engagement if the severity of the issue is or individual engagement; or represent a signi昀椀cant holding did we vote against management? su昀케ciently material. as a percentage of our portfolio. Of the resolutions on which we voted, what % 0.9% This watchlist is loaded onto EOS’s voting platform (or our did we abstain from voting? Our voting approach for listed equities Of the meetings at which we voted, what % did 68.0% The PPF sees voting as an essential tool from a stewardship external managers’ for pooled split-votes), which allows perspective in supporting engagement and enforcing regular automated reports to be produced for each voting we vote at least once against management? shareholder rights. environment. This process aims to give us su昀케cient time to review the shareholder documentation and ensure our voting intentions are implemented.