PPF hits milestones with 51% of engagement objectives

The Pension Protection Fund (PPF) has progressed 51 per cent of its engagement objectives to the next milestone as part of its stewardship activities in 2019/20, according to the organisation’s first responsible investment report.

The report showed that PPF had been most adept at progressing social objectives, with 57 per cent having reached their next target, compared to 54, 47, and 42 per cent for governance, environment and strategy, risk, and communication objectives, respectively.

Completed objectives covered a wide range of areas, from forced labour and modern slavery to action on board composition and diversity and inclusion.

Actions taken included the PPF’s external provider’s support of the ‘30% Club’ through the development of a board level diversity recommendation to have 30 per cent women on FTSE 100 boards and 25 per cent on FTSE 250 boards.

The provider also supported the creation of a central registry to enable stakeholders to access companies' modern slavery statements and to include a list of companies required to comply with the Modern Slavery Act.

The PPF was a signatory to the Principles for Responsible Investment (PRI) in 2007 and has therefore based its own core aims on those of PRI, such as incorporating environmental, social and governance (ESG) issues into decision-making and seeking appropriate ESG disclosures.

As well as detailing its own achievements, the PPF welcomed regulatory action from the Department for Work and Pensions which “clarified the requirements for UK occupational pension schemes”.

PPF chair, Arnold Wagner, said: “These included incorporating financially material environmental, social and governance (ESG) considerations into their approach, and we acknowledge the long-term benefits they will deliver.

“The UK pensions sector, as one of the world’s largest investor groups representing £1.6trn of assets, should be a leader on this. The UK’s enhanced regulations provide a significant opportunity to strengthen how its pensions industry is taking ESG factors into account and reporting on them, particularly for climate-related issues.”

Looking to the future, the PPF said it will extend measurements to its real assets in the next phase of its climate change implementation plan, develop its disclosures for the Task Force on Climate- related Financial Disclosures and review nature-based solutions and explore further potential opportunities for sustainable investment in forestry.

The pensions lifeboat also plans to develop a deeper understanding of ESG and climate change risks, as well as seeking greater transparency in reporting across its pooled funds and segregated mandates.

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