Progress on ESG risk disclosure, voting and climate focus

Pension Protection Fund reports improvements in ESG risk disclosure, new voting guidelines and increased focus on alignment with climate scenarios in latest Responsible Investment Reports

The Pension Protection Fund (PPF) has today published its third annual Responsible Investment report, continuing its commitment to transparency. This follows the publication in August of its second Climate Change report in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The two reports summarise the PPF’s activities and progress over 2021-2022 around responsible investment as well as managing climate risk.

Over the past year, the PPF has continued to improve its ESG risk measurement across the portfolio – including private markets - and align its policies and tools with the more ambitious 1.5 degrees climate scenario, something that is expanded on in its Climate Change report.

As part of its ongoing commitment to actively encourage responsible investment, the PPF, which holds £39 billion in its portfolio, has further used its voice to deliver company change by engaging with 196 companies on material ESG issues and voting at almost 5,000 meetings this year, including opposing at least one resolution at 67% of meetings.

In addition, it has: 

- Introduced new voting guidelines for listed equity holdings on climate change, modern slavery, and D&I, and consolidated its voting records across segregated and pooled mandates.

- Carried out a Net Zero alignment project across the complete portfolio to assess its alignment with the Paris Agreement and identify highest-priority engagement targets.

- Transitioned to a new equity benchmark to drive a significant reduction in the carbon exposure of the portfolio.

- Started requiring regular ESG metrics from alternatives managers and backed the ESG Outreach project by front to promote standardisation.

- Helped to develop a cross-body industry standard TCFD template for managers to report carbon emissions.

Claire Curtin, Head of ESG, commented, “The PPF is incredibly proud of the work and efforts highlighted in our latest Responsible Investing report, although we are still learning on our exciting ESG journey as we adapt to a changing world. We hope that this report not only highlights the progress we’ve made but provides an opportunity to share our insights and knowledge with the wider industry so that we can continue learning from each other.”

Looking ahead to the future, the PPF is seeking to advance its focus on Net Zero stewardship by using the findings from its portfolio alignment project to develop a stewardship strategy for the highest-priority engagement targets identified. Additionally, it is seeking to further engage with managers to explore ways to improve the level and quality of ESG data disclosure for credit and private markets, identify ESG investment opportunities and develop a holistic organisational sustainability strategy as part of its three-year Strategy Plan. 

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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 ten million members belonging to more than 5,200 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 more than £39 billion of assets under management. It also administers the Fraud Compensation Fund (FCF) the government’s Financial Assistance Scheme (FAS) and across both the PPF and FAS looks after more than 430,000 members. 

For further press information contact:

PPF Press Office
020 8406 2107
[email protected]
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