Strengthening Our investment Escalation Message from Key highlights our stewardship Our progress Our purpose approach and Our approach and exercising Our aspirations for 47 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 APPENDICES CONTINUED 1.5. The Board has put in place a responsible investment 1.7. In addition, the Board will provide the Fund Parties Appendix H policy, addressing controversial weapons, company with an Excel document con昀椀rming the constituents Our ESG review process conduct and sovereign bond exposure detailed of the Exclusion List as provided in the scanned PDF further below: copy. Following receipt of such instruction, the Fund Our four-stage ESG review is an essential part of selecting Parties shall use reasonable endeavours to e昀昀ect and appointing managers that align with our principles. 1.5.1. the Board will expect companies that are directly such exclusions within a reasonable timeframe and involved in the production of anti-personnel will con昀椀rm to the Board that the portfolio has been RI criteria and ESG considerations as part of our landmines, cluster weapons, chemical weapons and brought in line with the requested exclusions. If it will investment process biological weapons and of essential components become clear to the Fund Parties that for any reason of these weapons to be excluded from its it will not be possible to bring the portfolio in line 1. Request for proposal/ 2. Selection/ investment universe; with the requested exclusions, the Fund Parties will Stage identi昀椀cation due diligence 3. Appointment 4. Post funding 1.5.2. the Board will expect the Fund Parties to exclude from notify the Board. ESG Evidence of 昀椀rm-level Ensure ESG processes Binding ESG and climate Ongoing monitoring the investment universe sovereign bonds issued by 1.8. The Fund Parties shall prepare and send to the Board requirement and strategy-level ESG are in place, appropriate risk clauses inclusion in and engagement with countries subject to complete UN arms embargoes and such other person or persons noti昀椀ed from time policy; PRI support; and industry guidelines are legal documentation external managers, which the UK supports; and to time to the Fund Parties in writing on behalf of the capabilities or resources followed and reporting (e.g. IMAs, side letters) regular fund-level ESG, 1.5.3. the Fund Parties acknowledge the Board’s interest Board as soon as reasonably practicable and in any for ESG integration is available carbon and stewardship in investee companies making all reasonable e昀昀orts event no later than eight (8) Business Days after the reporting; commitment to to abide by the UN Global Compact and the OECD end of the relevant quarter, quarterly reports on: continuous improvement Guidelines for Multinational Enterprises and that the 1.8.1. compliance with the policies and standards set out in Board expects its managers to assess the signi昀椀cance the Statement of Investment Principles and Principles of risks and opportunities in relation to their fund’s for Responsible Investment, including any instances investments. Such assessment may include, where where those policies and standards were set aside in applicable and appropriate, the consideration of order to achieve investment objectives; the above guidelines. The Fund Parties will assist the Board as is reasonably necessary to manage 1.8.2. the key material ESG and climate-related concerns reputational risk and/or investigations that may arise and relevant metrics associated with Portfolio from individuals investments made where investee investments and an explanation of how the Fund companies fail to abide by the above guidelines. Parties have sought to identify, monitor and Such assistance may include the sharing of the manage them; investment research or, in the extreme, divestment or future segregation of pro昀椀t or loss relating to 1.8.3. the stewardship activities – including issuer any investment for which material reputational engagement – during the reporting period, including issues arise. evidence of the e昀昀ectiveness of those activities; and 1.6. In respect of clauses 1.5.1 and 1.5.2 above, the 1.8.4. voting activities over the reporting period, including Fund Parties will be provided with a list of excluded full disclosure of any votes and an explanation of any companies and countries which may be updated by exercises of discretion under the Fund Parties’ voting notice given in writing from time to time using the guidelines and con昀氀icts of interest. form speci昀椀ed in Annex A, signed in accordance with the Board’s signing authorities. Such noti昀椀cations may be sent via email containing a scanned PDF copy of the instruction, sent to the Fund Parties to con昀椀rm (or such other email account as is noti昀椀ed by the Fund Parties to the Board in writing).