John Cotton (Mirfield) Limited Retirement Benefits Scheme – Engagement Policy and Implementation Statement
Introduction
This Statement sets out how, and the extent to which, the Stewardship Policy and related policies on Environmental, Social and Governance (“ESG”) factors set out in the Statement of Investment Principles (‘SIP’) have been followed during the year to 5 April 2023. This Statement has been produced in accordance with The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 and the guidance published by the Pensions Regulator.
Investment Objectives of the Scheme
The Trustees believe it is important to consider the policies in place in the context of the investment objectives it has set. As set out in the SIP, the Trustees’ primary investment objective is to achieve an overall rate of return that is sufficient to ensure that assets are available to meet all liabilities as and when they fall due. In doing so, the Trustees also aim to maximise returns at an acceptable level of risk, taking into consideration the circumstances of the Scheme. The objectives set out above provide a framework for the Trustees when making investment decisions.
Policy on ESG and Stewardship
The Scheme’s SIP dated December 2020 and agreed with Mercer, set out the Trustees‘ policies on ESG factors and Stewardship. These policies are subject to regular review and the Trustees will reconsider in line with new guidance and when reviewing the SIP, which is subject to review at least triennially.
Scheme’s Investment Structure
The Scheme’s investment Portfolio is wholly invested in Scottish Widows Managed Fund (which is a pooled fund). The Trustees and Mercer, as the investment advisers, monitor the portfolio in line with the agreed investment objectives and risk profile, which are reviewed on a regular basis. A key duty is to ensure that the range of pooled funds is suitable to the overall mandate.
Under the portfolio, the underlying pooled fund units are held in the name of the Fund Managers. The Trustees therefore have no direct relationship with the Scheme’s underlying investments and no direct ownership of the underlying investments.
Trustee engagement
The Trustees’ engagement policies were first formalised in the December 2020 SIP. These were determined in conjunction with their investment adviser. The SIP notes that the Trustees will engage with their advisers on a regular basis. A further update will be provided in next year’s Statement.
Voting Activity
Where the Trustees are specifically invited to vote on a matter relating to the corporate policy, they will exercise their right in accordance with what they believe to be the best interests of the majority of the Scheme’s members. During the Scheme year, the Trustees have not been asked to vote on any specific matters.
As noted above, the Scheme has no direct relationship with the pooled funds it is ultimately invested in, and therefore has no voting rights in relation to the Scheme’s investments and no influence over the managers of the pooled funds. However, the Trustees have referred to and taken reassurance from the Fund Manager statements and published reports on ESG.