17.01.2024
- PPF publishes fourth Responsible Investment report, highlighting its continued commitment towards integrating material ESG risks into its investment approach.
- Highlights include:
- Creating a new Climate Watchlist to address the companies contributing to over 70 per cent of the PPF’s material financed emissions.
- Strengthened involvement in industry initiatives across a range of topics that include modern slavery, high quality reporting, proxy voting and mental health.
- Enhancing its voting guidelines with additional expectations for companies’ climate strategy and management - The report also highlights the positive impact of stewardship in driving forwards change and reaching net zero targets globally.
The Pension Protection Fund (PPF) has today published its fourth Responsible Investment Report, reinstating its commitment to sustainability and emphasising how asset owners can have influence through stewardship to drive real world transformation.
The annual report summarises how key stewardship and governance activities carried out by the PPF are contributing towards positive financial, societal and environmental outcomes. This included creating a Climate Watchlist to encourage businesses it invests in to contribute to a fairer, more sustainable future, as well as engaging with almost 700 companies on specific ESG issues and objectives.
Asset owners vote at shareholder meetings to constructively influence how companies operate sustainably, and the report outlines how the PPF voted on over 53,700 resolutions in 4,664 shareholder meetings from April 2022 to March 2023, and in more than two thirds of the meetings voted at least once against management.
Barry Kenneth, Chief Investment Officer at the PPF, said: “Despite a challenging financial backdrop over the last 18 months, we continue to recognise the value of strong stewardship and ESG integration as part of the wider investment process. The focus on understanding long-term material risks and opportunities has continued, with improved data accessibility, reporting and analysis across the portfolio.
“Our team has always firmly believed in understanding our risks, and doing so using evidence-based data. The development of our Climate Watchlist is a huge step forward for us to focus our efforts on our most emitting investments. Having seen the progress this has made in our utilisation of external data, I am excited about what could be possible in future years.”
The PPF, which holds £32.5bn in its portfolio, has also outlined how it’s developed its practices across governance, strategy and policy, risk management, and metrics and reporting to continue its commitment to transparency.
The Responsible Investment report follows the publication in August of the PPF’s third Climate Change report in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). As part of the PPF’s sustainability strategy, which outlines four key goals to embed sustainability across its investment, processes and business decision-making, the PPF has participated in several collective engagement initiatives, including the IIGCC’s new Net Zero Engagement Initiative, the Climate Change Action 100+ initiative, and Find It, Fix It, Prevent It addressing modern slavery within business and their supply chains.
Claire Curtin, Head of ESG and Sustainability, added: “Investing responsibly has always been at the heart of how we manage our investment portfolio. We have built our responsible investment (RI) strategy and stewardship processes in line with the long-term nature of our liabilities and our investment horizon. We embed material ESG considerations right across our investments as well as expecting the same from our external managers.”
Notes to editors
The priorities of the PPF’s approach to RI are:
Stewardship - participating in industry initiatives to drive positive societal and environmental action. The PPF uses share voting and issuer engagement to ensure boards are accountable. This year the PPF:
- Was accepted for a second consecutive year by the Financial Reporting Council (FRC) as a signatory to the UK Stewardship Code. The UK Stewardship Code sets high stewardship standards for those investing money on behalf of pensioners.
- Voted at over 4,500 (99.5 per cent) shareholder meetings where it was eligible to vote.
- Updated our voting guidelines with additional expectations for companies’ climate strategy and management.
Climate change - working with its asset managers to better understand risks relating to climate change. This year the PPF:
- created our first-ever Climate Watchlist as part of our work to encourage our investments to contribute to a fairer, more sustainable future. This involved identifying 87 companies in material sectors that collectively are responsible for over 70 per cent of the financed Scope 1 and 2 emissions associated with our public markets investments.
Reporting – being a strong advocate for transparency, working with its managers to improve their ESG and stewardship disclosures, and engaging with issuers and public policymakers to explore ways to improve the quality of ESG data disclosure. The year, the PPF:
- Engaged extensively with managers with a focus on reporting, engagement and using their voice for positive sustainability/ESG outcomes. This year’s focus was extended to our private market’s managers too.
About the PPF
The Pension Protection Fund (PPF) is a public corporation, set up by the Pensions Act 2004, and has been protecting members of eligible defined benefit (DB) pension schemes across the UK since 2005. The PPF is run by an independent Board and accountable to Parliament through the Secretary of State for the Department for Work and Pensions. It protects close to 10 million members belonging to more than 5,100 pension schemes. If an employer collapses and its DB pension scheme cannot pay members what they were promised, the PPF pays compensation for their lost pensions. The PPF is funded by a levy charged to eligible schemes, the return on its investments, assets from pension schemes transferred into the PPF and recoveries from insolvent employers.
The PPF is one of the UK’s largest asset owners with £32.5 billion of assets under management. It also administers the Fraud Compensation Fund (FCF) and the Government’s Financial Assistance Scheme (FAS), and across both the PPF and FAS looks after nearly 440,000 members.
For further press information contact:
PPF Press Office
020 8406 2107
[email protected]
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