1. Summary of our approach to Stewardship
As a responsible asset owner, the PPF believes that integration of material environmental, social and governance (ESG) factors can enhance the value of our investments, particularly over the long-term. We believe in engagement as a path for verifiable and tangible impact, focused on material issues. We are committed to supporting companies in building and sustaining good governance and progressing their practices on material environmental and social matters. In order to incentivise all issuers and companies, we are committed to transparent voting following a robust assessment and review of the practices of a company. We will use our voting rights to support what we consider to be in the best interests of the PPF and its stakeholders.We engage regularly with our asset managers and agents, and encourage them to demonstrate clear and transparent engagement and voting practices while also acknowledging our stewardship priorities. We’ll always seek to exercise our rights as shareholders to vote our ballots, unless it is operationally impractical or prohibitively expensive, for example due to share blocking markets or overly complex Power of Attorney requirements. The PPF also operates a share lending scheme. We will determine on a case by case basis whether is it appropriate to recall shares to facilitate us voting our full position at a shareholder meeting.
For our segregated Public Equities, we work with a designated stewardship provider, EOS at Federated Hermes (EOS), who we closely align with and participate actively in client discussions defining their engagement plans. We have direct oversight of the voting execution within our segregated equity mandates. This allows us to exercise our voting power and ensure consistency in our strategy. For our pooled equity funds, we have oversight of our managers’ stewardship activities and outcomes through regular review and quarterly reporting from them. Where possible, we set up split voting arrangements with managers of pooled funds, allowing us to instruct voting in a consistent manner. We monitor the consistency of our voting across mandates, in particular for any companies and issues with significant importance such as companies on our watchlists.
2. Our voting principles
We are guided by the best practice as demonstrated by our stewardship provider, EOS, and our voting principles closely align with their global voting guidelines.No abstentions: We aim to take an active position on matters open to vote and aim to either vote in favour or against a resolution and only abstain in exceptional circumstances, such as where our vote is conflicted or a resolution is to be withdrawn.
Support for management: We seek to be supportive of boards and to vote in favour of proposals unless there is a good reason not to do so in accordance with our voting guidelines, global or regional governance standards or otherwise to protect our interests.
Consistency of voting: We aspire to be consistent in our votes across our entire portfolio. We seek to provide clarity of our positions through our asset managers and designated stewardship provider, in accordance with our RI Strategy and stewardship priorities. However, we recognise the limitations of investing across a range of mandates, especially the challenges of implementation within pooled funds at times, and we do this on a best effort basis.
Engagement: Engagement is a fundamental aspect of our RI strategy, which we apply across all asset classes. Within our Public Equity portfolio, we have identified a list of high priority companies (“watchlist” companies) for which additional analysis is undertaken prior to voting. Should we determine that voting against a resolution is warranted if there is a reasonable prospect that engagement will generate further information to enable a better quality of voting decision we will seek to do so. We’ll also seek to inform such companies of any anticipated votes against management, together with the reasons why, through our designated stewardship provider.
On matters related to good governance such as Board independence, competent leadership or separation of key governance roles, we leverage the deep expertise and recommendations of our stewardship provider.
Climate Watchlist: We continue to operate a Climate Watchlist, in line with the IIGCC’s Net Zero Stewardship Toolkit’s guidelines. This has been updated in 2025 to reflect our public markets portfolios top emitting companies in material sectors that collectively are responsible for over 70 per cent of the financed Scope 1 and 2 emissions. In addition to our high priority, watchlist, companies, we will review the information provided at shareholder meetings and for these Climate Watchlist companies.
Escalation: Using our proxy votes effectively may form part of our formal escalation strategy, which can be leveraged where company practices have failed to improve or are improving too slowly. Ultimately, whilst threshold levels exist in relation to corporate behaviour, the variance of what is considered acceptable progress is significant due to factors such as location, company size and sector. Qualitative analysis of the shareholder meetings can result in one or more resolutions being voted against, should we consider it in our best interests.
3. Key themes for 2026
With a specific focus on financially material issues, we identify key ESG matters that are of particular importance in a specific AGM season and highlight them through targeted engagement.Climate change
As noted above, with the continued application of the Climate Watchlist, climate change is a key area of focus for the PPF when considered to be financially material to our investment in a company, and seeking to contribute to the global transition to Net Zero is a fundamental part of our approach to management of climate-related risks. Read our Climate Change Policy for more details. Through our stewardship provider and participation in investor-led initiatives, we encourage tangible progress around net zero and work with both our managers and companies to facilitate the transition to a low carbon economy.In order to track and encourage progress on climate, we utilise the management quality assessment of companies that are analysed by the Transition Pathway Initiative (TPI). We are also informed by the Climate Action 100+ Net Zero Benchmark for those companies included in this assessment. We also will be guided in our voting by the industry initiatives around net zero alignment for both asset owners and our asset managers.
For 2026, expectations for climate-related voting guidelines have been developed, taking the below factors into consideration:
Climate Action 100+ Net Zero Benchmark
· Companies identified as lacking comprehensive medium-term greenhouse gas emissions reduction targets and/or alignment with TCFD recommendations (now absorbed into IFRS S1 and S2 guidance) by the Climate Action 100+ (CA100+) Net Zero benchmark, or those scoring poorly across the benchmark.
· Companies identified as failing to appropriately reflect, or demonstrate consideration of, material climate-related risks in their financial statements by the CA100+ Net Zero benchmark or other sources.
· Companies identified as laggards in the general management of climate-related risks and opportunities through a proprietary aggregate score derived from the CA100+ Net Zero benchmark.
Transition Pathway Initiative
· Any company scoring below Level 3 on the Transition Pathway Initiative (TPI) Management Quality Score. Companies in the oil and gas, coal mining, electric utilities, mining & materials, or automotive sectors, and/or European, UK, Australian or New Zealand companies scoring below Level 4 will also be flagged, or those not achieving indicator 16 requiring scenario planning.
Banks
· Banks without a medium-term target for reducing emissions associated with its financing activities and/or those that do not recognise climate-related risks as a key risk category or explain the exclusion.
Coal
· Companies included on the Global Coal Exit List without Paris-aligned coal phase-out plans and those listed as expanding coal-related infrastructure.
· Banks with significant exposure to thermal coal in the absence of a coal policy, drawing on the Still Banking on Coal dataset.
Paris Alignment
· Companies identified by the Global Oil & Gas Exit List as significantly expanding tar sand and extra heavy oil assets without the necessary investment guardrails. We deem these assets as the most unlikely to be Paris-aligned and, therefore, to pose the greatest financial risk.
· Upstream oil & gas companies with a methane emissions intensity above 1% of volumes, as assessed by the ERM.
Shareholder proposals: With the rise of ‘anti-ESG’ proposals and increasing volumes, increased scrutiny is given to proposals and proponents to ensure voting aligns with our beliefs. We will continue to review shareholder proposals related to climate change internally where appropriate.
Biodiversity
Deforestation: There will be a continued focus on companies scoring poorly on Forest500. This is defined as companies that score below 10 on the Forest 500 ranking (assesses companies’ disclosure and management of deforestation risks), and Financial Institutions that score 0 on the Forest 500 ranking.Antimicrobial resistance (AMR): We will generally seek to support shareholder proposals on the topic where they are relevant and aligned to our interests.
Assessing human rights laggards
Following significant development in recent years targeting laggards across several focus areas, the approach for 2026 will remain largely unchanged.We may recommend a vote against responsible directors if:
General failings: a company is in clear breach of its applicable regulatory responsibilities (e.g. UK’s Modern Slavery Act), or has caused or contributed to egregious, adverse human rights impacts or controversies, without providing appropriate remedy. Also, as evaluated by the engagement manager and/or severe controversy scores by third-party ESG data providers. See more on Modern Slavery below.
Benchmark laggards: a company scores significantly lower than industry peers (bottom 15-20%) within credible external benchmarks of companies on human rights, without providing a sufficient explanation or a commitment to improve:
· 2023 Corporate Human Rights Benchmark (ranks some of the world’s largest companies on the policies, processes, and practices they have in place to systematise their human rights approach and respond to serious allegation)
2022 Ranking Digital Rights Index (ranks some of the world's largest technology companies on their commitments and policies affecting users' freedom of expression and privacy rights)
· 2022 BankTrack Human Rights Benchmark (ranks some of the world’s largest banks on their progress towards fully implementing the UNGPs)
· 2025/2026 Know the Chain Index (ranks some of the world’s largest companies on their current corporate practices to identify and eradicate forced labour risks in their supply chain).
Modern slavery
Modern Slavery will continue to be a topic of key focus in the UK. Given the systemic nature of modern slavery and the serious risk it poses to businesses and investors, we expect all UK businesses covered by the Modern Slavery Act (the Act) to meet the reporting requirements of the Act. We further encourage the members of the FTSE 350 to be leading in this area, and to take substantial action to address the prevalence of slavery within their supply chains.The quality of reporting delivered under Section 54 of the Act can act as an important marker for how seriously senior management are taking this risk. It improves accountability and enables companies to identify the areas of their business most at risk. Companies that meet the reporting requirements and clearly disclose the areas of their businesses most susceptible to modern slavery benefit from increased investor confidence. Conversely, non-compliance with the Modern Slavery Act poses as a serious risk to long-term investors.
In 2026, we will continue as members of the PRI collaboration initiative Votes Against Slavery. The purpose of this initiative historically has been to engage with FTSE 350 companies around their public disclosure in compliance with the Act, by writing to the board of each non-compliant company with a targeted letter explaining the nature of non-compliance, and the steps needed to achieve compliance. In 2024, this was expanded to cover AIM companies that fall under the remit of the Act.
We will again consider withholding our support for the approval of the annual report and accounts at the company’s next AGM, should the required changes to achieve compliance not occur prior to the annual general meeting. All non-compliant companies have been contacted and details of perceived non-compliance communicated.
Diversity & inclusion
Board diversityWe believe that board members should broadly reflect the diversity of society and that there is value in diversity of thought, skills and attributes.
We will consider voting against relevant directors and/or the chair where we determine that board diversity (by gender, ethnicity, age, relevant skills and experience, or tenure) is below our minimum expectations and we determine the company is making insufficient progress to improve. Thresholds may be set at a market level to recognise best practice in the region (for example around gender and ethnicity) or may be applied globally (for example around skills and experience). In 2026, we consider the following to be minimum expectations and will likely oppose the chair or other responsible directors if not met:
UK: In the UK, we support the changes to the FCA’s listing rules for board diversity and encourage companies to disclose whether they comply – or, if not, why not – with the following targets: at least 40% of board seats and at least one senior board position (Chair, CEO, CFO or SID) held by a woman, and at least one board seat held by someone from an ethnic minority background. FTSE 350 companies will receive stricter voting outcomes for being non-compliant with FCA Listing Rules approach to gender/ethnic diversity (40% female, 1 ethnic, 1 female at exec level).
Europe and Australia: Matching diversity/independence thresholds with local best practice (e.g., min 30% female in all markets) and continued focus on below board-level diversity. German MDAX constituents are encouraged to meet the 40% diversity target in addition to DAX companies.
Asia/GEMs markets: Following the introduction of minimum gender targets of 15% female directors across all markets, this guideline has been developed into market specific minimum aspirations for board and management diversity. These aim to strike a balance between market context and international good practices.
In most Asian markets and emerging markets, we seek for the board to be comprised of at least 30% women by 2030 and in some markets, we encourage boards to achieve this level well in advance of 2030. Ten Asian and emerging market countries are now expected to meet the 30% gender diversity guideline.
Other Board Governance/Remuneration and Audit Voting Policy Changes
For 2026 we are maintaining the below in relation to wider corporate governance issues:Board Independence in Developed Markets (ex-US)
We have amended the director independence criteria, introducing a five-year "cooling off" period for executives being appointed to key board positions, compared to a two-year period required in 2024.
Remuneration
We will harmonise standards across regions to improve consistency (e.g., increased focus on disclosure at all Asia/GEMs and European markets); ‘common rules approach’.
Japan
Given the continued issues relating to capital inefficiency in the Japanese market, the policy will be further developed to focus on promoting wind down of cross-shareholding >5% of net assets via vote recommendations against directors.