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PKA

PRI reporting framework 2018

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Asset class implementation not reported in other modules

SG 16. ESG issues for internally managed assets not reported in framework

Describe how you address ESG issues for internally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Fixed income - Securitised

All managers have to comply with PKA's guidelines, including the exclusion list.

Private equity

PKA does not internally manage PE investments.

Property

All contractors need to comply with PKA's guidelines. In relation to property, PKA has a particular focus on labour rights and climate/environment. This means PKA on an annual basis survey how many apprentices have been used. PKA certify most of the new commercial buildings to best standards and is now beginning to certify older buildings.

Infrastructure

All infrastructure projects have to comply with PKA's guidelines. PKA only invest in 1-3 infrastructure projects per year and hence has an extensive overview of the potential ESG related issues. This is also assessed by the risk team.

16.2. Additional information [Optional].

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SG 17. ESG issues for externally managed assets not reported in framework

17.1. Describe how you address ESG issues for externally managed assets for which a specific PRI asset class module has yet to be developed or for which you are not required to report because your assets are below the minimum threshold.

Asset Class

Describe what processes are in place and the outputs or outcomes achieved

Fixed income - SSA

PKA does not cover ESG in relation to soverign bonds. ESG issues are relevant when investing in green bonds. Here PKA has a dedicated green bond framework to cover ESG related issues.

Fixed income - Corporate (non-financial)

All of PKA's managers have to comply with PKA's policies and exclusion list. Hermes provides ESG integration support across all asset classes. It also provides an engagement and voting overlay service. Engagement with companies is undertaken both for monitoring and influencing purposes. Engagement is undertaken holistically, and it is typical for a number of issues across the themes of ESG. For the major part of its engagement work, Hermes sets objectives at the outset of the engagement. Engagements are then monitored by reference to a system of milestones to ensure that progress is made over a reasonable time. Engagements for monitoring involve a series of interactions with senior company personnel. Such engagements may take place alongside engagements for influence and so often involve dialogue at management and B-level. Engagements for monitoring purposes take the form of a two-way dialogue with the company and don’t solely involve letter writing activity, though letters may be used. Engagements for monitoring are undertaken to gather information on companies' processes to ensure that they adhere to best practice. Any perceived risks to shareholder value or reputational risks may then be taken forward as an engagement for influence with a view to influencing the desired change.

Private equity

All of PKA's managers have to comply with PKA's policies and exclusion list. Prior to an any investment, the PE team has to cover an extensive number of questions related to ESG.

Infrastructure

All of PKA's managers have to comply with PKA's policies and exclusion list. Prior to an any investment, the PE team has to cover an extensive number of questions related to ESG.

Hedge funds - DDQ

Select whether you use the PRI Hedge Fund DDQ

Hedge funds

N/A

Forestry

PKA has not made any investments in forestry for many years. When the investments were made, they were made accoring to beset practice standards.

Farmland

PKA has invested in three farmland funds, two where ESG factors are more relevant. PKA require the managers to draft a comprehensive ESG report each year outlining how the manager is managing ESG factors on a daily basis. We also do site visits as we did earlier in 2018.

Inclusive finance

PKA has invested in two microfinance funds by the same manager. PKA is the lead investor and could hence ensure best practices standards where implemented. The manager also draft an annual impact/ESG report covering potential conflicts, case stories etc. PKA also does site visits.

17.2. Additional information.

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