Summary of responses to the PRI reporting and assessment tool 2009

Environment Agency Pension Fund

Organisational Overview
Organisational Overview

This section captures information that helps determine if some of the subsequent questions are required and also plays a role in benchmarking. Please make sure you provide accurate answers.
This is also one of the more challenging sections as it may require gathering information from multiple sources. We suggest you collect all this information before progressing to other parts of the questionnaire.

1. What were your organisation's total assets under management as of the most recent count (in millions)?

(Estimating to the nearest hundred million as of December 31 2008 would be preferable - although the most recent available count would be sufficient. If your currency is not listed, please select 'other' and indicate your currency or convert to United States dollars.)

1216.031
Please select currencyBritish pound (GBP)
1a. If 'other' was selected, please specify the other currency hereNo Answer

2. Please pick the one category and level of complexity that best describes your organisation (if your organisation is a pension fund, please also select your pension type). This information may be used to provide you with the best possible benchmarking.

Complexity

  • Highly complex:- (>20 investment strategies, multiple offices in different countries)
  • Moderately complex:- (5-20 investment strategies, a few offices)
  • Simple:- (<5 investment strategies, one office)
Category
Complexity
Pension type
Non-corporate pension or superannuation or retirement or provident fund or planSimplePrimarily defined benefit
2a. If 'other' was selected, please specify the other category hereNo answer
3. Please provide an approximation of your average asset mix for 2008 or your asset mix as of the most recent count (in percent):

(+/- 5% is sufficient. The sum of all the fields must be 100%)

 
Internal
Active
Internal
Passive
External
Active
External
Passive
Listed equity (developed markets)0035.424
Listed equity (emerging markets)003.913
Fixed income (not including corporate issuers)000.80
Fixed income (corporate issuers)0011.30
Private equity006.80
Listed real estate or property0000
Non-listed real estate or property004.40
Hedge funds0000
Commodities0000
Infrastructure0000
Cash000.40
Other (Please specify):
0000
Governance, Policy and Strategy
Governance, Policy and Strategy

Questions 5 through 15 are about the governance and oversight of your organisation's responsible investment activities and the associated policies and strategy. This section will be scored separately from the six Principles.

"Policy" in this section may refer to one overall RI policy or multiple policies that address various elements of RI.

5. Do you have a policy that makes specific reference to responsible investment (RI) or environmental, social, and governance (ESG) issues?Yes
6. If you have a policy that makes specific reference to RI/ESG issues, which of the following Principles does it address?

(Please check all that apply.)

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.,Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.,Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.,Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.,Principle 5: We will work together to enhance our effectiveness in implementing the Principles.,Principle 6: We will each report on our activities and progress towards implementing the Principles.
7. If you have a policy that makes specific reference to RI/ESG issues, which of the following asset classes does it apply to?

(Please check all that apply.)

Listed equity (developed markets),Listed equity (emerging markets),Fixed income (not including corporate issuers),Fixed income (corporate issuers),Private equity,Non-listed real estate or property
8. If you have a policy that makes specific reference to RI/ESG issues, when was your policy last reviewed?Within the last 3 years, and planning to in 2009
9. If you have a policy that makes specific reference to RI/ESG issues, has it been disclosed publicly?

(If answering yes, please indicate how this statement can be obtained - a URL would be sufficient. If answering no, please explain why not.)

Yes: 'http://www.environment-agency.gov.uk/pensions then select publications"'
10. To what extent has your approach to responsible investment been translated into a plan of action as reflected in business planning, strategic planning, or similar internal management processes?

  • Large extent: you have both long and short term RI objectives relating to various aspects of your RI program across asset classes and regions that are regularly updated or reviewed. Larger organisational objectives have been reduced to individual objectives for which staff members are held accountable on a regular basis. There are key performance indicators related to responsible investment and resources have been allocated. You feel you have invested considerably in RI implementation and processes.
  • Moderate extent: you have a plan for some aspects of your RI program but not others. Some staff members have specific RI objectives. High level goals may be understood but not documented. You feel you are progressing in RI implementation but have some way to go.
  • Small extent: you have developed a list of actions when you first adopted responsible investment or your approach to RI is ad hoc with new initiatives being implemented as time allows. You are at an early stage in your RI implementation.
To a large extent
11. Who within your organisation has responsibilities related to RI implementation?

(Please check all that apply.)

Board of trustees or board of directors,Committee of the board of trustees or board of directors,Other senior management,Middle management,RI or ESG specialist,Non RI or ESG investment professional
12. Do you have a policy or approach/process that requires screening out or excluding stocks or sectors from your investment universe?We do not screen or exclude stocks or sectors
13. What are your reasons for screening out or excluding stocks or sectors from your investment universe?

(Please check all that apply.)

No Answer
14. Please describe how your organisation assesses if there is a link between your RI activities and the performance (risk and return) of your investments:Undertake research covering a wide range of topics and across assets classes. Most of of our active managers are able to demonstrate the environmental, or ESG score for each company they are invested in and provide an analysis of this in each quarterly report. We are then able to compare that to the risk/ return data. We also undertake direct research to demonstrate the link between ESG and financial risk/ return.
15. Please add any overall comments and clarifications related to Governance, Policy, and Strategy here.We believe there is a considerable body of evidence that well governed companies produce better and more sustainable returns than poorly governed companies. Also investors including pension fund managers and shareholders that influence the Board/Directors of under-performing companies can improve the management and financial performance of those companies. Our Environmental Overlay Strategy and Corporate Governance Policy, both publicly available via www.environment-agency.gov.uk/pensions set clarify our Governance, Policy and Strategy. This web site at the above address plus www.environment-agency.gov.uk/environmentalfinance includes copies of the recent research referred to above.
Principle 1
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

For the purposes of this questionnaire, integration is the consideration of ESG issues alongside traditional financial measures, based on the belief that ESG issues can affect the performance (risk and/or return) of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). Please note that the view that ESG issues can influence investment returns may be based either on

  1. the premise that performance on these issues will eventually be reflected in financial and operational outcomes (revenue growth, margins, etc.) or
  2. the premise that the way in which the market rates or prices the stock will be affected even in the absence of an impact on financial or operational performance. However, exclusion of stocks from portfolios or downweighting them based on the possibility that an association with the stocks may adversely affect the owners profile or brand amongst stakeholders is not regarded as integration.
16. Please provide a one to two paragraph description of your approach to this Principle.

This question and similar questions relating to each of the other Principles are being asked for three reasons. The first reason is to gather details regarding signatory implementation for inclusion in the PRI annual report on progress. The second reason is to capture activities not captured directly by questions in the Reporting and Assessment Tool. The third reason is to provide context and details to support verification calls.

We fully integrate ESG into investment management through: Fund manager selection, mandatory ESG requirements in their IMA and regular reporting (in their quarterly reports) of how ESG has influenced stock purchases/ sales, engagement and voting. We undertake independent research and analysis of stock performance and ESG issues. We have established a set of extra-financial KPI's to monitor fund manager performance alongside their financial performance. Other aspects of how we approach this is set out in various documents on the internet, please see previous reference.
Integration of ESG issues into investment analysis and decision-making processes of internally managed assets
17. For what percentage of your internal assets under active management do you integrate RI/ESG issues into your internal investment decision-making processes (in percent)?

(+/- 5% is sufficient.)

Listed equity (developed markets)
Listed equity (emerging markets)
Fixed income (not including corporate issuers)
Fixed income (corporate issuers)
Private equity
Listed real estate or property
Non-listed real estate or property
Hedge funds
Infrastructure
18. To what extent have you integrated RI/ESG issues into your internal active investment decision-making processes?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q17.)

  • Large extent: you employ a systematic process to integrate RI/ESG issue consideration. RI/ESG issues may be considered in security valuation, security selection, and/or portfolio construction.
  • Moderate extent: for some RI/ESG issues you may have a systematic integration approach while for other issues you approach them in an ad hoc manner or not at all.
  • Small extent: for a few RI/ESG issues you may integrate consideration some of the time.
Listed equity (developed markets)No Answer
Listed equity (emerging markets)No Answer
Fixed income (not including corporate issuers)No Answer
Fixed income (corporate issuers)No Answer
Private equityNo Answer
Listed real estate or propertyNo Answer
Non-listed real estate or propertyNo Answer
Hedge fundsNo Answer
InfrastructureNo Answer
19. When forming investment views, to what extent does your organisation gather and analyse ESG information, including, where applicable, information obtained from engagement activities?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q17.)

  • Large extent: you gather and analyse information across a comprehensive range of ESG issues and across a large proportion of the markets and assets in your investment universe. Furthermore, the information is updated regularly. This research and analysis may be undertaken internally or may be purchased from an external party. In the latter case, internal resources are nevertheless applied to interpreting the information. Alternatively, one or more ESG issues may be the key driver for your overall investment strategy and process.
  • Moderate extent: you gather and analyse information across a moderate range of ESG issues and across a significant part of your investment universe. There remain some gaps in coverage, either in terms of the issues and asset markets covered, or the frequency with which analysis is refreshed, as well as some gaps in internal capacity to analyse the information.
  • Small extent: you gather and analyse some information on ESG issues. This research is ad hoc in nature, however, and considerable gaps exist in coverage and timeliness. You feel that you are in the early stages of developing capacity to gather and analyse information on ESG issues.
  • Not applicable: only a possible answer if you don't manage assets internally.
No Answer
20. To what extent do portfolio managers or others making investment decisions in your organisation apply the ESG information and analysis available to them when constructing and managing portfolios?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q17.)

  • Large extent: you have a systematic approach towards assessing the implications of all ESG research and analysis which is gathered by your organisation and incorporating it into your assessment of the investment outlook for all investments which are potentially affected and, hence, into portfolio holdings.
  • Moderate extent: you regularly consider the implications of ESG research for investments where the case for doing so is clear-cut. In other cases, however, ESG research is not thoroughly assessed and applied in formulating views on all investments where it may be relevant.
  • Small extent: ESG research is used on an  as-needed basis. Generally, ESG research may be used as part of a qualitative overlay and to decide between investments where the investment case, judged on traditional analysis, is marginal. Alternatively, ESG research may be applied in portfolios only in respect of a relatively small number of sectors where one or more ESG issues are of most obvious relevance e.g. major corporate governance failings, high exposure to heavy polluters.
  • Not applicable: only a possible answer if you don't manage assets internally.
No Answer
21. To what extent do you have a process for improving the effectiveness of research and portfolio management processes with regards to ESG factors?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q17.)

  • Large extent: on a continuous basis, you review both the quality and relevance of ESG research and the effectiveness with which it is applied in your day-to-day portfolio management, with a view to optimising your overall investment process through identifying opportunities or risks.
  • Moderate extent: you review ESG research regularly (at least annually) with a view to enhancing its coverage and relevance and/or the way it is used in portfolio management. The focus is both on identifying investment opportunities and avoiding risks.
  • Small extent: you occasionally review the integration of ESG research.
No Answer
22. To what extent do you have a process for assessing and improving internal investment staff competency to incorporate RI/ESG issues into investment analysis and decision-making processes?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q17.)

  • Large extent: all relevant staff members undergo a regular assessment of their RI competency, resulting in an individual plan for ongoing professional development. In addition, the overall skill mix within the team is regularly reviewed to identify any gaps. RI-competency may be integral to recruitment decisions.
  • Moderate extent: relevant staff members are encouraged to undertake relevant external RI-related training and some in-house sessions are provided. RI-competency may be an element in recruitment decisions.
  • Small extent: relevant staff members are permitted, at the organisation's cost, to attend external RI-related training courses, conferences etc.
No Answer
Integration of ESG issues into investment analysis and decision-making processes of externally managed assets
23. For what percentage of your external assets under management are RI/ESG issues integrated into the investment decision-making processes of your external investment managers (in percent, +/- 5% is sufficient)?
Listed equity (developed markets)100
Listed equity (emerging markets)100
Fixed income (not including corporate issuers)100
Fixed income (corporate issuers)100
Private equity100
Non-listed real estate or property100
24. To what extent have RI/ESG issues been integrated into the investment decision-making processes of your external investment managers?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q23.)

  • Large extent: your investment manager employs a systematic process to integrate RI/ESG issue consideration. RI/ESG issues may be considered in security valuation, security selection, and/or portfolio construction.
  • Moderate extent: for some RI/ESG issues your investment manager may have a systematic integration approach while for other issues they approach them in an ad hoc manner or not at all.
  • Small extent: for a few RI/ESG issues your investment manager may integrate consideration some of the time.
Listed equity (developed markets)To a large extent
Listed equity (emerging markets)To a large extent
Fixed income (not including corporate issuers)To a large extent
Fixed income (corporate issuers)To a large extent
Private equityTo a large extent
Non-listed real estate or propertyTo a large extent
25. To what extent do you consider the capabilities of external investment managers to incorporate RI/ESG issues when searching for, selecting and retaining your external investment managers?

(Applies only to investments that include integration of RI/ESG issues as indicated in Q23.)

  • Large extent: ESG integration is integral to your views on all of your investment managers and, hence, on your hire, fire and retain decisions. You look at the ESG information available to your managers, the way that they integrate it into their investment decisions and the competence of their staff in ESG areas. Where you believe that managers are not developing their capabilities to your satisfaction, you raise your concerns with them and ensure that they recognise the importance of RI capability in determining the awarding of future mandates.
  • Moderate extent: ESG integration is part of your assessment of all managers and there have been cases where your degree of comfort with a manager has been affected by their performance in the area. You may have made hire/fire decisions on this basis on rare occasions. You monitor the resources which the managers devote to the area and encourage them to develop their capability. You do not, however, tend to investigate the way that ESG research is reflected in portfolios.
  • Small extent: you observe that your existing and potential managers have differing degrees of commitment to RI/ESG integration and, at the margin, favour those with higher commitment. This issue could be a factor in hire and fire decisions in the future. You have not, however, made a detailed assessment of the RI-related resources applied by all of your managers, nor of the way that such resources are integrated into the investment process.
To a large extent
Integration - final comments
26. Please add any overall comments and clarifications related to Principle 1 here. Please also describe any significant activities relating to Principle 1 that have not been captured by the questions above.The EAPF press release on the restructuring of our Active Global Equity managers in July 2008 was explicit on how the PRI was factored into the decision making process.
Principle 2
Principle 2:

We will be active owners and incorporate ESG issues into our ownership policies and practices.

27. Please provide a one to two paragraph description of your approach to this Principle.Our Investment managers to decide when and how to vote, although expect them to make regular contact at senior executive level with companies in which we invest. We instruct fund managers on these votes regarding environmental issues directly and publish the voting record on-line. We have adopted the ISC and ABI standards, in respect of best practice in corporate governance. All managers are requested to vote on our shares and quarterly monitoring reports are provided by our global custodian Northern Trust.We primarily operate our engagements through our fund managers, and they are also responsible for identifying issues for engagement. With respect to the questions relating to engagement policy we have two overall policy documents - Environmental Overlay and Corporate Governance. In addition we undertake research which will directly lead to engagement activity e.g on carbon disclosure.

(Proxy) voting - applies only to listed equity (developed markets), listed equity (emerging markets) and listed real estate or property.

28. Do you have a (proxy) voting policy?

(If 'Yes - disclosed publicly', please indicate how your (proxy) voting policy can be obtained- a URL would be sufficient. If answering no, please explain why not.)

Yes - disclosed publicly: 'www.environment-agency.ogv.uk/pensions'
29. Does your (proxy) voting policy address environmental, social, and governance issues?
EnvironmentalYes
SocialYes
GovernanceYes
30. Who decided how to vote on ballot items on behalf of your organisation in 2008?

(Please check all that apply.)

External investment manager,Internal investment manager,External engagement service provider(s)
31. To what extent is information related to ballot items gathered and analysed before voting decisions are made?

  • Large extent: you might buy external voting research and recommendations and supplement it with your own research. Alternatively, you may undertake the research largely in-house. You review each ballot item before casting your votes and undertake whatever analysis is necessary to make an informed judgement.
  • Moderate extent: you might either buy external voting research and recommendations or perform your own research. You review most ballot items before casting your votes and undertake whatever analysis is necessary in most cases to make an informed judgement.
  • Small extent: You generally rely on your research provider to gather and analyse ballot items. You might perform some very limited research on a small number of issues. You might only review some ballot items before your votes are cast and don't usually undertake additional analysis to make an informed judgement.
To a large extent
32. Do you ensure that voting is done in accordance with your voting instructions?Yes for all
33. Do you inform companies of your rationale when you abstain or vote against management recommendations?Yes for all
34. Please indicate how many resolutions you could have voted on and how many resolutions you did vote on in 2008:

(include abstentions as votes where votes against are not possible, use the last available one year period if information for 2008 is not available or too difficult to gather, approximate numbers are acceptable. If you are unable to provide the exact number please provide an approximation of the percentage by entering 10 in the 'Resolutions could have voted on' column and your estimate in the 'Resolutions voted on' column. So if you voted on about 70% of the possible resolutions you would enter 7 in the 'Resolutions voted on' column. If you are not sure, please enter a 1 in all four fields.)

 
Resolutions could have voted on
Resolutions voted on
Domestic1411214112
Foreign1411114111
35. You are classified as an Asset Owner and should not answer this question. For the listed equities that you manage, do you provide (proxy) voting services for your clients if they request them?No Answer
36. How does your securities lending program address voting?We do not have a securities lending program
37. How many shareholder resolutions related to ESG issues did you file or co-file during 2008?
As lead filer0
As co-filer0
Planning to be lead filer in 20090
Planning to be co-filer in 20090
38. Please explain why you did or did not file or co-file any shareholder resolutions related to RI/ESG issues during 2008:At this time we do not feel we have the resources required to file/ co-file an ESG resolution but actively support those who do. We intend to review the potential use of filing/ co-filing ESG resolutions as part of investment strategy review during 2009/10.
Engagement - general
39. Who engaged with companies to seek ESG improvements in 2008?

Please rank who engaged with companies according to their importance within your overall active ownership activities. You can only select Most, Second, Third and Fourth most important once each. Only the method you rank as 'Most important' will be scored for benchmarking purposes. If you wish to request that your other methods of engagement also be scored, please complete all the relevant sections and email the PRI at assessment@unpri.org when you submit your response.

Internal staffFourth most important
External investment manager(s)Second most important
External engagement service provider(s)Most important
Other (Please specify): Collaborative engagement via PRI
Third most important
40. Do you have a written engagement policy or other documents that direct engagement?

(If 'Yes - disclosed publicly', please indicate how your policy can be obtained- a URL would be sufficient.)

Yes - disclosed publicly: 'It is contained in different documents depending on the issue, www.environment-agency.gov.uk/pensions'
41. If you have an engagement policy or other documents that direct engagement, what do they include?

(Please check all that apply.)

General high level policy to support direction of agents to engage with companies,Indication of what markets it applies to,Expectations of companies with regards to environmental issues,Expectations of companies with regards to governance issues,Approach to monitoring companies,Approach to selecting companies for engagement,Approach to measuring engagement success
42. How many companies are you invested in?2301
Engagement - internal staff
43. To what extent do you have a process for identifying and prioritising ESG related engagement opportunities?

  • Large extent: you gather and analyse information across a comprehensive range of ESG issues and across a large proportion of the markets in your investment universe. Furthermore, the information is updated regularly. This research and analysis may be entirely undertaken internally or may be purchased from an external party. In the latter case, however, it is understood that some internal resource would be required to interpret the information. Your research may include an analysis of the impacts of various issues on specific companies and prioritisation of engagement opportunities.
  • Moderate extent: you gather and analyse information across a moderate range of ESG issues and across a significant part of your investment universe. There are some gaps in your coverage however, either in terms of the issues and markets covered, or the frequency with which analysis is refreshed.
  • Small extent: you gather and analyse some information on ESG issues. This research is ad hoc in nature, however, and considerable gaps exist in coverage and timeliness. The process may be largely reactive rather than proactive.
To a moderate extent
44. How many portfolio companies did you engage with on ESG issues in 2008?
  • Extensive engagement: you may have had multiple instances of focused interaction with a company on issues identified by you and with a view to changing the company's behaviour. You were predominantly engaging with people at the company with the authority to change corporate behaviour. The engagements were systematic and you began them with a clear goal in mind. Extensive engagement includes more than writing letters and includes bilateral meetings in person or on the phone. You may have identified other investors to work with to address the issues you have identified.
  • Moderate engagement: you had more than one interaction with a company on issues identified by you or others. The engagement was somewhat systematic but the specific desired outcome may not have been clear at the outset. You may have responded to requests to engage with other investors on issues identified by them.
  • Basic engagement: you directly contacted companies but your engagements tended to be ad hoc and reactive. At the commencement of the engagement, you may not have had clear goals in mind regarding the desired changes to the company's behaviour and you may not have pursued the issue beyond your initial contact with the company. You may have signed on to letters authored by others. Your engagements might be more about gathering information than seeking ESG related improvements.
Extensive engagement8
Moderate engagement100
Basic engagement100
45. What proportion of your engagements addressed environmental, social or governance issues (in percent)?

(One engagement may address more than one issue, so the three percentages need not add to 100%. For example, if you only had one engagement and it addressed environmental and governance issues then the answer would be 100% for environmental and 100% for governance.)

Environmental100
Social0
Governance50
46. To what extent do you set ESG engagement objectives and attempt to evaluate your engagement success?

  • Large extent: you may have developed a clear and systematic process (either through internal efforts or in partnership with an academic or other group) to regularly measure the impact of your engagement efforts. You set engagement objectives before engaging with companies and track outcomes against those objectives.
  • Moderate extent: you may have developed a process to measure the impact of your engagement efforts but may not always apply it. You might set engagement objectives sometimes before engaging with companies.
  • Small extent: you tend not to set engagement objectives before engaging with companies and may only keep track of your successful engagements.
To a moderate extent
47. What percentage of engagements that ended in 2008 were deemed successful (in percent)?

(Engagement success: a considerable part of objectives or milestones that were set when the engagement commenced were achieved.)

50
48. To what extent do you have a process for assessing and improving staff competency to act as active owners and incorporate ESG issues into ownership practices?

  • Large extent: all relevant staff members undergo a regular assessment of their competency in the area of active ownership, resulting in an individual plan for ongoing professional development. In addition, the overall skill mix within the team is regularly reviewed to identify gaps. Competency in the skills required to implement active ownership practices is integral to recruitment decisions.
  • Moderate extent: relevant staff members are encouraged to undertake relevant external training and some in-house sessions are provided. Competency in active ownership activities is an element in recruitment decisions.
  • Small extent: relevant staff members are permitted to attend external training courses, conferences etc, paid for by the organisation, where the events will enhance active ownership competencies.
To a large extent
Engagement - external engagement service provider(s)
49. How many portfolio companies did your external engagement service provider(s) engage with on ESG issues on your behalf in 2008?
  • Extensive engagement: your external engagement service provider(s) may have had multiple instances of focused interaction with a company on issues identified by you or them and with a view to changing the company's behaviour. Your external engagement service provider(s) was predominantly engaging with people at the company with the authority to change corporate behaviour. The engagements were systematic and they began them with a clear goal in mind. Extensive engagement includes more than writing letters and includes bilateral meetings in person or on the phone. They may have identified other investors to work with to address the issues you or they have identified.
  • Moderate engagement: your external engagement service provider(s) had more than one interaction with a company on issues identified by you, them or others. The engagement was somewhat systematic but the specific desired outcome may not have been clear at the outset. Your external engagement service provider(s) may have responded to requests to engage with other investors on issues identified by them.
  • Basic engagement: your external engagement service provider(s) directly contacted companies but their engagements tended to be ad hoc and reactive. At the commencement of the engagement, they may not have had clear goals in mind regarding the desired changes to the company's behaviour and they may not have pursued the issue beyond their initial contact with the company. Your external engagement service provider(s) may have signed on to letters authored by others. Their engagements might be more about gathering information than seeking ESG related improvements.
Extensive engagement390
Moderate engagement0
Basic engagement0
50. What proportion of your external engagement service provider(s)'s engagements on your behalf addressed environmental, social or governance issues (in percent)?

(One engagement may address more than one issue, so the three percentages need not add to 100%. For example, if you only had one engagement and it addressed environmental and governance issues then the answer would be 100% for environmental and 100% for governance.)

Environmental11
Social21
Governance68
51. To what extent do you contribute to and assess the ESG engagement activities of your external engagement service provider(s)?

  • Large extent: you probably have a regular dialogue with your service provider to identify and prioritise engagement issues. You may also collaborate with them to set engagement objectives. You require and review regular reporting on engagement activities performed on your behalf. You question why companies have or have not been engaged, the success of the engagements, and the background and experience of staff performing engagement for you, with a view to assessing the value of the service on an ongoing basis.
  • Moderate extent: you keep up-to-date with issues being pursued by your provider but do not generally participate in determining the issues or the objectives. You require and review regular reporting on engagement activities performed on your behalf. You evaluate the merit of the service regularly (say, annually) but do not undertake in-depth analysis in doing so.
  • Small extent: you receive reporting on engagement activities performed on your behalf but have minimal dialogue with your service provider. You do not evaluate the merit of the service regularly.
To a large extent
Engagement - external investment manager(s)
52. How many portfolio companies did your external investment manager(s)'s engage with on ESG issues on your behalf in 2008?
  • Extensive engagement: your external investment manager(s) may have had multiple instances of focused interaction with a company on issues identified by you or them and with a view to changing the company's behaviour. Your external investment manager(s) was predominantly engaging with people at the company with the authority to change corporate behaviour. The engagements were systematic and they began them with a clear goal in mind. Extensive engagement includes more than writing letters and includes bilateral meetings in person or on the phone. They may have identified other investors to work with to address the issues you or they have identified.
  • Moderate engagement: your external investment manager(s) had more than one interaction with a company on issues identified by you, them or others. The engagement was somewhat systematic but the specific desired outcome may not have been clear at the outset. Your external investment manager(s) may have responded to requests to engage with other investors on issues identified by them.
  • Basic engagement: your external investment manager(s) directly contacted companies but their engagements tended to be ad hoc and reactive. At the commencement of the engagement, they may not have had clear goals in mind regarding the desired changes to the company's behaviour and they may not have pursued the issue beyond their initial contact with the company. Your external investment manager(s) may have signed on to letters authored by others. Their engagements might be more about gathering information than seeking ESG related improvements.
Extensive engagement222
Moderate engagement183
Basic engagement32
53. What proportion of your external investment manager(s)'s engagements on your behalf addressed environmental, social or governance issues (in percent)?

(One engagement may address more than one issue, so the three percentages need not add to 100%. For example, if you only had one engagement and it addressed environmental and governance issues then the answer would be 100% for environmental and 100% for governance.)

Environmental40
Social40
Governance80
54. To what extent do you contribute to and assess the ESG engagement activities of your external investment manager(s)?

  • Large extent: you require and review regular reporting on engagement activities performed on your behalf. You have regular discussions with your external managers on the issues to be pursued through engagement and the engagement objectives. You also have a dialogue on why companies have or have not been engaged, the success of engagements, and the background and experience of staff performing engagement for you. You regularly evaluate the managers' engagement activity based on these dialogues and other analysis.
  • Moderate extent: you take an active interest in the managers' engagement activities but do not have regular dialogue with the manager. You require and review regular reporting on engagement activities performed on your behalf. You evaluate the managers' engagement activity regularly (say annually) but do not undertake additional analysis in doing so.
  • Small extent: you receive reporting on engagement activities performed on your behalf where provided but do not actively seek to discuss engagement activities with your managers. You do not evaluate the managers' engagement activities regularly.
To a large extent
55. Did you consider the capabilities of external investment managers to engage with companies on ESG issues on your behalf when searching for, selecting and retaining your investment managers?Yes, for all of our external investment managers
Engagement - final comments
56. What ESG issues were addressed in your or your service providers'engagement initiatives?

(Please check all that apply.)

Activities in conflict zones,Benefits and compensation,Bribery/corruption,Climate change,Environment,Governance,Health,Health and safety,HIV/AIDS,Human rights,Labour issues,Nanotechnology / novel technology
57. What measures do you or your external service provider(s) use to assess the impact and success of engagement?We use environmental foot printing to review overall improvements in our underlying benchmark and our own portfolio. We ask manages to report on progress from previous engagements. Change in environmental performance / ESG scoring of individual companies. We are looking to improve tools and technique in this area during 2009.
58. Please add any overall comments and clarifications related to Principle 2 here. Please also describe any significant activities relating to Principle 2 that have not been captured by the questions above.For clarification of the role of internal staff. 1. we undertake direct research into company environmental disclosures, roughly every 2 years. The direct engagement activity was undertaken in 2007 so those figures are not reflected in the numbers above although part of an long terms programme. 2. A large proportion of work is analysing ESG risks across the whole portfolio using environmental foot printing, carbon foot printing, extra financial key performance indicators and issue specific research e.g assets held which have interests in controversial activities or places. This risk work is then used with our fund manager and external provider to direct their engagement activities. 3. We also work with our managers to project manage engagements with funds e.g. private equity funds and property funds annually - although not companies we have included these in our figures above as they are part of portfolio.
Principle 3
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
59. Please provide a one to two paragraph description of your approach to this Principle.Disclosure by the entities in which we invest is the top priority by EAPF engagement both direct and via Fund managers and also through engagement with domestic policy makers. A key focus in 2008 was mandatory carbon disclosure in the Climate Act 2008.
60. Who asked investee companies (or other investment entities) to provide information about their ESG policies, practices or performance in 2008?

(Please check all that apply.)

Internal staff,Internal staff collaboratively with other investors,External investment manager(s),External investment manager(s) collaboratively with other investors,External engagement service provider(s),External engagement service provider(s) collaboratively with other investors,Other (please specify): 'Public policy groups e.g. CDP , IIGCC'
61. {ERR} To what extent did you or your external engagement service provider(s) or your external investment manager(s) have a dialogue with investee companies (or other investment entities) regarding the production of standardized reporting about their ESG policies, practices or performance in 2008?

('Standardized' could also include systematic reporting in areas where standardized reporting has not yet emerged.)

  • Large extent: you or your agents have direct contact with companies and regularly encourage systematic ESG reporting by them. You or your agents have a systematic approach to assessing the quality of reporting across a range of issues which are judged to be important and ask for standardised reporting where appropriate. You or your agents have taken a leading role in investor collaborations seeking systematic reporting by companies. You or your agents may also regularly provide feedback to companies on their reporting.
  • Moderate extent: you or your agents have direct contact with companies. You or your agents ask them to provide standardised reporting on key ESG issues from time to time, but you do not have a systematic approach to identifying cases where scope exists for improved reporting. You or your agents may also occasionally provide feedback to companies on their reporting.
  • Small extent: you or your agents have signed on to one or more collaborative initiatives regarding standardised reporting. You or your agents may also have occasionally asked companies for standardised reporting and /or provided feedback on their reporting.
Listed equity (developed market)To a large extent
Listed equity (emerging markets)To a moderate extent
Fixed income (not including corporate issuers)To a moderate extent
Fixed income (corporate issuers)To a moderate extent
Private equityTo a large extent
Non-listed real estate or propertyTo a large extent
62. What formats of reporting on ESG issue policies, practices or performance have been requested? Please check all that apply.Integrated with regular financial reports,Standalone corporate social responsibility or sustainability reporting,Carbon Disclosure Project (CDP)
63. To what extent did you or your external engagement service provider(s) or your external investment manager(s) seek information from companies regarding their practices related to norms, standards, codes of conduct or international initiatives related to ESG issues in 2008?
  • Large extent: you or your agents have made a substantial and systematic effort to seek information from companies regarding their participation in and compliance with a number of relevant norms, standards and codes.
  • Moderate extent: you or your agents have made a significant effort to seek information from companies regarding their participation in and compliance with at least some relevant norms, standards and codes.
  • Small extent: you or your agents have requested information from some companies but this has been undertaken in an ad hoc manner.
To a large extent
64. Please add any overall comments and clarifications related to Principle 3 here. Please also describe any significant activities relating to Principle 3 that have not been captured by the questions above.No Answer
Principle 4
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.
65. Please provide a one to two paragraph description of your approach to this Principle.We have actively promoted the PRI principles and actively and publically use them in the selection of asset managers and applicable service providers.
66. Did you consider RI/ESG requirements when searching for and selecting service providers in 2008 when applicable?
Investment consultantYes, all of the time
Proxy voting service providerYes, all of the time
External overlay service providerYes, all of the time
Investment research providerYes, all of the time
67. Have you included RI/ESG elements in the following?
Investment monitoringYes, all of the time
Incentive structure (internally managed)Yes, all of the time
Incentive structure (externally managed)Yes, some of the time
Contractual relationships with external investment managersYes, all of the time
Contractual relationships with other investment related service providersYes, some of the time
68. To what extent did you encourage your eligible service providers to become PRI signatories or consider RI/ESG factors in 2008?

(Service providers include but are not limited to: external investment managers, investment consultants, proxy voting service providers, external engagement service providers, and investment research providers.)

  • Large extent: in 2008 you asked all of your service providers that are not yet PRI signatories if they would sign the PRI or develop RI/ESG capability.
  • Moderate extent: in 2008 you asked some (greater than 40%) of your service providers that are not yet PRI signatories if they would sign the PRI or develop RI/ESG capability.
  • Small extent: in 2008 you asked a few (less than 40%) of your service providers that are not yet PRI signatories if they would sign the PRI or develop RI/ESG capability.
  • Not applicable: only an available option if you have no service providers or if all of your service providers are already PRI signatories or already consider RI/ESG factors.
To a large extent
69. You are classified as an Asset Owner and should not answer this question. To what extent did you encourage your institutional clients to become PRI signatories or consider RI/ESG factors in 2008?
  • Large extent: in 2008 you asked all of your institutional clients that are not yet PRI signatories or don't yet consider RI if they would become PRI signatories or consider RI.
  • Moderate extent: in 2008 you asked some (greater than 40%) of your institutional clients that are not yet PRI signatories or don't yet consider RI if they would become PRI signatories or consider RI factors.
  • Small extent: in 2008 you asked a few (less than 40%) of your institutional clients that are not yet PRI signatories or don't yet consider RI if they would become PRI signatories or consider RI.
  • Not applicable: only an available option if you have no institutional clients or if all of your institutional clients are already PRI signatories or already consider RI/ESG factors.
No Answer
70. To what extent did you encourage peer organisations to become PRI signatories or consider RI/ESG factors in 2008?
  • Large extent: in 2008 you were an active advocate for RI and the PRI. You may have actively sought to promote RI or the PRI in industry forums or when speaking with the media.
  • Moderate extent: in 2008 when approached, you were an advocate for RI and the PRI. When asked, you may have sought to promote RI or the PRI in industry forums or when asked about RI when speaking with the media.
  • Small extent: in 2008 when approached, you were sometimes an advocate for RI and the PRI. When asked, you might have sought to promote RI or the PRI in industry forums or when asked about RI when speaking with the media, but you many not have encouraged your peers to become PRI signatories or consider RI/ESG factors very often.
To a large extent
71. Have you revisited any relationships with service providers in light of RI/ESG issue-related capabilities?Yes
72. Does your broker evaluation process (which determines how you allocate commissions to brokers) include an ESG component and/or do you have a budget to pay for ESG broker research?Not applicable
73A. What is your total investment research budget (including brokerage commissions intended to recognize research, in the same currency used in Q1)150
73B. what proportion of your total investment research budget is allocated to ESG research (in percent)?50
74. To what extent do you identify ESG issues and suggest them to brokers or other investment research providers for research?
  • Large extent: you have identified specific environmental, social, or governance issues that you would like more research on from your brokers or other research providers. You may have identified specific companies, sectors or themes for research. You may have contacted multiple research sources to indicate your desire to receive this sort of research. You may have asked for mainstream research that incorporates ESG issues.
  • Moderate extent: you may have identified some research providers that can provide you with ESG research and suggested future research ideas. You may not have contacted all of your research providers to request this research.
  • Small extent: you have indicated to your brokers or other investment research providers that you are interested in receiving ESG research.
To a large extent
75. To what extent did you engage in dialogue, lobbying or initiatives pertaining to government policy and/or industry regulations (for example, stock exchanges or accounting standards) related to RI/ESG issues in 2008?
  • Large extent: you may have initiated dialogue on policy initiatives relating to RI/ESG issues or participated extensively in dialogues initiated by others. You may have commented on issues relevant to your domestic market as well as issues relevant to foreign markets.
  • Moderate extent: you participated in some policy initiatives relating to RI/ESG issues. Your engagement may be focused on domestic markets.
  • Small extent: you participated in a few policy initiatives relating to RI/ESG issues when asked to.
To a large extent
76. Please add any overall comments and clarifications related to Principle 4 here. Please also describe any significant activities relating to Principle 4 that have not been captured by the questions above.Principle 4 has been a key area in 2008 and will remain so in 2009 both in terms of contracts we award but also in the development of tools to make the process easier.
Principle 5
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.
77. Please provide a one to two paragraph description of your approach to this Principle.We actvitively support other organisations with environmental goals. Such organisations include the UNPRI, UKSIF, CDP, Local Authority Pension Fund Forum (LAPFF)campaign on environmental reporting, and Institutional Investors Group on Climate Change (IIGCC).
78. To what extent did you collaborate with other investors to improve your effectiveness in implementing each of the following Principles?

  • Large extent: you may have initiated one or more collaborative initiatives or industry associations relevant to the principle and adopted a leadership position within established initiatives or associations. You may also have worked actively with a number of other investors on specific issues of relevance to the principle.
  • Moderate extent: you have been an active participant in a number of relevant collaborative initiatives. You may also have undertaken some work with other investors on specific issues of relevance to the principle.
  • Small extent: you may have joined a small number of relevant collaborative initiatives but have not been an active participant in their activities.
Principle 1To a moderate extent
Principle 2To a moderate extent
Principle 3To a large extent
Principle 4To a large extent
79. How did you use the PRI Engagement Clearinghouse in 2008?

(Please check all that apply.)

Logged in during 2008 to use the Clearinghouse as a learning tool or to keep up to date on ongoing engagements,Joined a collaborative engagement led by another signatory that was posted to the Clearinghouse,Led a collaborative engagement and posted it to the Clearinghouse,Planning to log in in 2009
80. Did you participate in any of the following RI/ESG issue-related collaborations and/or associations? For those not listed, please use the "other" field:

(Please check all that apply.)

Carbon Disclosure Project,Extractive Industries Transparency Initiative (EITI),Institutional Investors Group on Climate Change (IIGCC),Regional social investment organisation (for example SIF or UKSIF),United Nations Environmental Program Finance Initiative (UNEP FI),Other (please specify): 'Fund managers',Other (please specify): 'UK Governement Departments'
81. Please indicate the three RI/ESG issue-related collaborative engagement initiatives and/or industry associations that you participated in most extensively and indicate how you did so:
  • Large extent: you may have participated actively in the leadership of the initiative and in the preparation of position papers, joint statements or meetings. You also acted as a spokesperson for the initiative and actively promoted the initiative. You may participate in working groups on specific issues and contribute to the organisation or content of events organised by the group. You may have provided financial support for the initiative.
  • Moderate extent: you may have participated to some degree in leadership of the initiative and/or in preparation of position papers and joint statements. You also provided general support for the initiative in various non-public forums.
  • Small extent: You joined the initiative or association, attended some meetings and paid a membership fee but were not actively involved in the leadership or work program of the initiative.
PRITo a large extentCo-led initiative to get some of the largest asset managers who are currently non-signatories to join.
Institutional Investors Group on Climate Change (IIGCC)To a large extentPart of the Property Working group which published a Trustee Training guide on Property and Climate Change.
1st Other specify from Q80To a large extentWorked with our Aviva to survey all IPD index funds regarding environmental management and performance.
82. Please add any overall comments and clarifications related to Principle 5 here. Please also describe any significant activities relating to Principle 5 that have not been captured by the questions above.We have worked collaboratively with central government departments on research regarding SRI investments, carbon disclosure and public sector environment accounting and reporting.
Principle 6
Principle 6: We will each report on our activities and progress towards implementing the Principles.
83. Please provide a one to two paragraph description of your approach to this Principle.We included details of our responsible investment strategy and notable achievements during the year in our Annual Report and Accounts and Fundfare, our member newsletter. We actively use the internet to maximise access and transparency. Our website address is www.environment-agency.gov.uk/pensions.
84. To what extent did you disclose (privately and/or publicly) your approach to incorporating ESG issues into investment analysis and decision-making processes in 2008?

(If you disclose publicly, please indicate how this disclosure can be obtained - a URL would be sufficient. If answering not at all, please explain why not.)

  • Large extent: you provided a review of your investment process, highlighting the way in which analysis of ESG issues is integrated into investment decisions. This review was comprehensive (e.g. covered multiple asset classes where relevant) and detailed, subject to the necessity to protect information on proprietary techniques. This review was disclosed publicly and is readily accessible via your website.
  • Moderate extent: you may have prepared a comprehensive and detailed review of your investment process highlighting ESG integration. However, it was not necessarily distributed publicly. Alternatively, your review may have contained gaps either in coverage or in detail.
  • Small extent: you provided only a relatively brief overview of your investment approach and the integration of ESG analysis into decisions.
To a large extent: 'www.environment-agency.gov.uk/pensions.'
85. How did you disclose your (proxy) voting record in 2008?

(Please select all that apply. If you disclose publicly, please indicate how this disclosure can be obtained - a URL would be sufficient. If answering not at all, please explain why not.)

Disclosed publicly: 'www.environment-agency.gov.uk/pensions.',Some votes
86. To what extent did you disclose (privately and/or publicly) your RI/ESG issue-related engagement activities, results and progress in 2008?

(If you disclose publicly, please indicate how this disclosure can be obtained - a URL would be sufficient. If answering not at all, please explain why not.)

  • Large extent: your reporting provided background on the issues at hand, the nature of the engagement and the outcomes. You may have reported the companies that you engaged with and the issues covered with the companies. You may have also covered emerging issues on which you intend to pursue engagement in future. You may have reported publicly on all of your key RI/ESG engagement activities.
  • Moderate extent: you reported on some of your key RI/ESG engagement activities. Your reporting may not have been disclosed publicly.
  • Small extent: you provided an overview of your RI/ESG engagement activities, possibly including some examples.
To a large extent: 'www.environment-agency.gov.uk/pensions - pubic disclosure is based on the research'
87. Did you disclose (privately and/or publicly) RI/ESG activities, results and progress related to Principle 3, Principle 4 or Principle 5 in 2008?

(If you disclose publicly, please indicate how this disclosure can be obtained - a URL would be sufficient. If answering not at all, please explain why not.)

Principle 3Yes - to clients or beneficiaries and the publicwww.environment-agency.gov.uk/environmentalfinance
Principle 4Yes - to clients or beneficiaries and the publicwww.environment-agency.gov.uk/pensions
Principle 5Yes - to clients or beneficiaries and the publicwww.environment-agency.gov.uk/pensions
88. How would you like to publish your responses to this PRI Reporting and Assessment tool?

(Please check all that apply.)

Please automatically publish our responses to the reporting and assessment tool in full on the PRI website
89. Please add any overall comments and clarifications related to Principle 6 here. Please also describe any significant activities relating to Principle 6 that have not been captured by the questions above.Our website includes; Annual report and Accounts Fund fare Investment strategy implementation review Research reports on responsible investment Voting on environmental resolutions, updated in June and October. Top holdings Review global equity manager selection process Links to the research undertaken by Environmental Finance Links to collaborative research we have participated
Closing Comments
90. Please describe the benefits you have enjoyed as a result of signing the PRI:Easy recognition by external parties as to our commitment to responsible investment. Use and collaboration via the clearinghouse. UNPRI newsfeed is considered very useful by the team.
91. What has your organisation changed as a direct result of becoming a PRI signatory?It has enable greater colaboration and we updated our standard IMA to reflect PRI.
92. Did the financial market turmoil of 2008 cause you to change your approach to the consideration of ESG factors or active ownership? If it did, please explain how.Only in the sense that it reinforced our commitment to the integration of ESG, it increased the importance and workload in this area.
93. What are the top three activities the PRI Secretariat could undertake to enhance and encourage further implementation of the PRI by current and prospective signatories?
1.Work with current signatories to delver casestudies or such like that demonstrate the fiduciary agruments behind RI.
2.Create trustee demand. Work with current signatories to produce more guidance for Trustees as to how RI can be implemented - first steps, next steps, more comprehensive approach.
3.More information needs to be developed to demystify RI for asset managers, to assist in demonstrating different approaches both within and across assets classes.
94. What are your top three PRI-related goals/priorities for 2009?
1.First public Responsible Invesment report.
2.Get our remaining non-sigatory managers and service providers to become signatories.
3.The investment strategy review, which will review of our engagement priorisation process.
95. What were your most significant achievements in 2008 in relation to your implementation of Principles?
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.Appointment of three new PRI signatories as external asset managers together with publicity as to the role the PRI during manager selection.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.Enhance are active ownership overlay service.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.A short report reviewing the attitudes and actions of property fund managers toward environmental issues, e.g building in flood plains, publish jointly by the Environment Agency Pension Fund with its property fund manager Aviva.
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.Co-led collaborative engagement to get large non-signatory assest managers to sign up to the PRI.
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.IIGCC - Trustee Training publication on climate change and Property investment.
Principle 6: We will each report on our activities and progress towards implementing the Principles.Produce internal draft of our first responsible investment report.
96. What were your biggest barriers in 2008 with relation to your implementation of the Principles?
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.Asset manager understanding of RI approaches both within and across assets classes. Avoiding greenwash during manager selection.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.Transparency by asset managers to asset owners and sufficient details to determine if engagement has been effective.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.Lack of consistenct/ comparable disclosures by entities e.g carbon/ carbon equivalent disclosures.
Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.Understanding of RI in passive asset management.
Principle 5: We will work together to enhance our effectiveness in implementing the Principles.Limited resource to do all of what we want to do.
Principle 6: We will each report on our activities and progress towards implementing the Principles.The mis-use/ misunderstanding of data or reports that are provided for transparency purposes and publically used to undermine our RI programe.
97. Please indicate which principle you find the most difficult to implement and the principle you find the least difficult to implement:
Most difficultPrinciple 4
Least difficultPrinciple 1