Strengthening Our investment Escalation Message from Key highlights our stewardship Our progress Our purpose approach and Our approach and exercising Our aspirations for 39 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 CONTINUED Voting on climate issues Glencore – Vote Against ‘Say on Climate’ Proposal Dollar Tree – Vote for shareholder proposal on emissions The company has recently committed to: As noted above, 2022 saw the start of ‘anti-ESG’ sentiment Glencore plc is a Swiss multinational commodity trading reduction targets making its way into shareholder meetings. Despite this, our and mining company. Although the company has made Dollar Tree Inc. is an American multi-price-point chain approach to voting on climate issues was maintained. positive moves in terms of tightening medium-term of discount stores. For its June 2022 AGM, a shareholder 2022 was the second year we saw ‘Say on Climate’(SoC) greenhouse gas emissions targets and reducing Scope 1, proposal was made requiring the company to set reduction Set our ambition to achieve resolutions proposed by management on the agenda. 2 and 3 emissions targets, we continue to be concerned targets for greenhouse gas emissions aligned with the Paris Net Zero Scope 1, 2 and 3 Across primary 昀椀nancial markets in Europe, the number of by the high level of emissions from coal production. Agreement. The company’s current strategy, targets and proposals increased by more than 50 per cent compared to These would need to reduce around 70 per cent by 2030 disclosure fall short of alignment with the Paris goals. As we emissions by 2050 and to 2021. The highest number of SoC proposals came from UK to be aligned with the Paris Agreement to keep global expect companies to be strategically aligned to the Paris companies, principally insurers and 昀椀nancials, utilities and warming to 1.5°C above pre-industrial levels. Given this Agreement, we voted for the proposal. announce 1.5 degree-aligned mining companies. short timespan, the company’s continued investment in coal production is also a major concern. In line with near-term Scope 1, 2 and 3 Given the emergence of SoC resolutions in 2021, we our voting policy that companies should be strategically emissions reduction targets expected companies to have reviewed and taken on board aligned to the Paris Agreement, we voted against 55% investor expectations in terms of climate reporting and Glencore’s SoC proposal. on or before 30 June 2024. strategy, leading to a raising of the bar in 2022. This did of shareholders supported the shareholder proposal. not happen, in our opinion, resulting in the PPF voting against over half of SoC management resolutions in 2022 – a reversal of the 78 per cent level of support in 2021. We 2 4% voted against management where we felt that there was inadequate disclosure, poor management of climate-related of shareholders that voted did not support the risks or insu昀케ciently ambitious targets. company’s SoC proposal. SoC votes in 2021 were mostly proposed by companies Engagement is ongoing through EOS to work with emissions reduction targets trajectories aligned with with the company to reduce emissions. the Paris Agreement, whereas 2022 saw companies with less-aligned pathways seeking approval. For example, Australian energy company Woodside Petroleum received a 49 per cent vote against its SoC resolution, with the PPF Say on Climate: Shareholder resolutions on climate: Votes on shareholder resolutions amongst shareholders who voted against it. See also the How we voted in 2022 Votes against management by rationale by climate theme case study on Glencore (right). From a shareholder proposal perspective, 2022 saw the highest number of shareholder resolutions proposed on company agendas globally across a range of issues (not just climate-related). Our most common reasons for supporting climate proposals were insu昀케cient targets or action on climate change from the company. As expected, US companies received the majority of proposals, with a 41 72 108 notable year-on-year increase in the number of proposals. This is primarily due to the SEC’s new approach to ‘economic relevance’ and ‘ordinary business exceptions’ that could be used by companies to omit proposals from the ballot. However, the increase in volume did not lead to an increase in support, most likely due to lower quality proposals making it onto the agenda. In Europe, ESG-related shareholder proposals that gained Against management 54% Lack of Disclosure/Reporting Analysis 11% Climate Action Plan 6% traction were generally limited to those proposed by With management 46% Insu昀케cient action on climate change 29% Climate Change Action 7% key activist groups such as Follow This and ShareAction. Lack of strategy/policies/plan aligned 15% Report on Climate Change 46% Follow This targeted ‘big oil’ companies aiming to get them with current commitments to adopt Paris-aligned emissions strategies. ShareAction Insu昀케cient targets and/or climate GHG Emissions 32% proposed social-related resolutions at Sainsbury’s and plan/strategy/policies 42% Renewable Energy 5% Unilever in addition to a resolution at Credit Suisse related Misalignment with current ambitions 3% Restriction of Fossil Fuel Financing 4% to the 昀椀nancing of fossil fuel assets.