PPF enhances its own ESG strategy
UK - The Pension Protection Fund (PPF) has appointed F&C Investments to offer advice on responsible investment and provide voting and engagement services.
The organisation said it also intends to publish its UK voting records on its website on a quarterly basis as it aims to enhance its responsible investment strategy.
The fund, which is now valued at £1.5bn (€1.9bn), is already signed up to the United Nations Principles for Responsible Investment (UNPRI) but said the appointment of F&C and the decision to publish the voting records will "encourage good practice" and reduce market risk.
F&C has been awarded a 45-month contract and the PPF said the appointment would help the organisation address a range of "long-term, material ESG issues" across its assets, beginning with UK equities.
Under the terms of the appointment, F&C will exercise all of the PPF's UK voting rights and will also engage with companies in its UK portfolio to encourage them to adopt "best practice" on a range of issues including corporate governance arrangements, transparency, reporting and climate change.
The PPF also claimed the publication of its voting records will mark "the first step" towards regular reporting, with further plans to report on any future engagement activities as they develop.
According to the organisation, the changes will enhance its existing investment strategy, which is based on the expectation that "companies and governments with sound environmental, social and governance (ESG) principles are more likely to offer strong, long-term financial performance and stability".
Martin Clarke, director of financial risk, said the moves would ensure the PPF builds on its commitment to take account of ESG considerations when deciding where to invest.
He said: "We believe that encouraging good practice in this area can reduce market risk and preserve shareholder value over the long-term. By making our voting records public for the first time, we are demonstrating our commitment to key PPF strategic objectives - being principled and open in our actions."
The PPF has meanwhile confirmed it would "continue to monitor the extent to which its fund managers address ESG issues, and will look to expand its responsible investment activities to other asset classes over time".
The PPF recently issued a tender for up to five global equity managers to join a list of 'on-call' managers who could be asked at any time to look after assets rather than retendering contracts each time.
Global equities are currently managed by Newton Investment Managers, and UK equity investments are run by State Street Global Advisers and Lazard. (See earlier IPE article: PPF tenders £100m global equity portfolio)
Morley also runs the PPF's property portfolio, while Auriel Capital Management has responsibility for the fund's currency overlay.
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