This statement sets out how, and the extent to which, the Engagement Policy in the Statement of Investment Principles (‘SIP’) produced by the Trustee has been followed during the 6-month period to 5 October 2020.  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 subsequent amendment in The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.

Investment Objectives of the Plan

The Trustee believes it is important to consider the policies in place in the context of the investment objectives it has set and as set out in the SIP.

The Trustee’s primary objective is to act in the best interest of its members and ensure that the obligations to the beneficiaries of the Plan can be met. In meeting this objective the Trustee’s further objectives are to:

  • By means of an agreed combination of investment return and funding budget from the Sponsor, move the Plan to a position of being 100% funded on a de-risked funding basis (gilts +0.5% p.a.), which is expected to take place by 2035. The expected timeframe is based on analysis as at 31 May 2020. 
  • In doing so, to opportunistically reduce the degree of risk in the Plan’s investment arrangements, thereby helping to protect the Plan’s improving funding position.

Policy on ESG, Stewardship and Climate Change

The Plan’s SIP includes the Trustee‘s policy on Environmental, Social and Governance (‘ESG’) factors, stewardship and Climate Change.  This policy sets out the Trustee‘s beliefs on ESG and climate change and the processes followed by the Trustee in relation to voting rights and stewardship. 

In order to establish their ESG beliefs and produce this policy, the Trustee undertook investment training provided by its investment consultant, Mercer Limited (Mercer), on responsible investment. This training covered ESG factors, stewardship, climate change and the approach undertaken by Mercer Global Investments Europe Limited (MGIE) and Mercer Alternatives AG (Mercer AG) in their capacity as investment managers to the Ireland and Luxembourg domiciled collective investment schemes in which Plan assets are invested. This training was provided during the May 2019 Trustee Meeting and the resulting policies were incorporated into the SIP in September 2019. The Trustee keeps its policies under regular review with the SIP subject to review at least once every three years and without delay after any significant change in investment policy.

During the six months to 5 October 2020, the SIP was updated to incorporate the Trustee’s policy with respect to arrangements with, and evaluation of the performance and remuneration of, asset managers and portfolio turnover costs as well as reflecting the Scheme’s interest in a Central Asset Reserve (‘CAR’), purchased in May 2020.

The following work was undertaken during the year relating to the Trustee‘s policy on ESG factors, stewardship and climate change, and sets out how the Trustee’s engagement and voting policies were followed and implemented during the year.

  • The Trustee has appointed Mercer to act as discretionary investment manager in respect of the Plan’s assets and such assets are invested in a range of Mercer Funds managed by MGIE.
  • Investment managers appointed by MGIE to manage the Mercer Funds are expected to evaluate ESG factors, including climate change considerations, and exercise voting rights and stewardship obligations attached to the investments, in accordance with their own corporate governance policies and current best practice, including the UK Corporate Governance Code and UK Stewardship Code, regardless of where they are domiciled. In addition, they are expected to monitor investee companies and to report on stewardship activities and outcomes on an annual basis, as set out in a publicly available Sustainable Investment Policy. This policy was last updated, and provided to the Trustee for review, in August 2020.
  • The Trustee considers how ESG, climate change and stewardship is integrated within Mercer’s, and MGIE’s, investment processes and those of the underlying asset managers in the monitoring process. Mercer and MGIE is expected to provide reporting to the Trustee on a regular basis, at least annually, on ESG integration progress, stewardship monitoring results, and climate-related metrics.
  • Over the 6-month period to 5 October 2020, Mercer, under its delegated authority, increased the Plan’s Growth Portfolio’s target allocation to the Mercer Sustainable Global Equity Fund by 2.5% and further increased this allocation following year-end. The Trustee understands this additional allocation improves the level of explicit ESG consideration of the Plan’s investment. Mercer specifically reports on Mercer Sustainable Global Equity Fund’s ESG factors in the semi-annual Sustainability Monitoring Report. The Trustee was provided the latest report, to 30 June 2020, in October 2020.


  • The Trustee considers how ESG, including climate change, is integrated within Mercer’s and MGIE’s investment processes across all Mercer Funds invested in by the Plan by reviewing the ESG ratings assigned by Mercer (and its affiliates’) global manager research team, which are included in the investment performance report produced by Mercer on a quarterly basis. ESG Ratings are reviewed by MGIE during quarterly monitoring processes, with a more comprehensive review performed annually — which seeks evidence of positive momentum on ESG integration. Expectations are set as ESG3 or above, where practicable and relevant to the strategy (with ESG1 being the highest rating and ESG4 being the lowest). Comparisons are also made with the appropriate universe of strategies in Mercer’s global investment manager database with these comparisons set out in the investment performance report.  Prior to year-end, the latest investment performance report reviewed by the Trustee contained ESG ratings as at 30 September 2020.
  • Climate-related metrics such as carbon foot- printing for equities and/or climate scenario analysis for diversified portfolios are also reviewed at least annually by Mercer and MGIE. From 30 September 2020, the quarterly investment performance reports the Trustee receives, provide the weighted average carbon intensity of the Plan’s equity funds and compare this against the appropriate universe of strategies.

Stewardship monitoring


Mercer produces an annual report, the Mercer Limited Stewardship Monitoring Report, that summarises and comments on the stewardship activities and disclosure of the investment managers appointed within the largest MGIE equity funds within the Model Growth Portfolio.

The latest Stewardship Monitoring Report, covering the period 1 July 2018 to 30 June 2019, provides voting statistics , together with brief commentary, based on manager disclosed information and covers votes cast in four parts: a) votes against management; b) votes against proxy adviser policy (where applicable); c) abstentions; and d) no votes. The report also provides summary reporting on engagement activities undertaken by managers to capture the level of disclosure and examples given by the managers for insights into where the manager has exchanged views with companies on a range of strategic and governance issues, together with environmental and social topics. 


For the next Stewardship Monitoring Report covering the 2020 reporting cycle, vote reporting will include a general description of voting behaviour, an explanation of the most significant votes taken, information on the use, if any, of the services of proxy advisors, and information on how votes have been cast in the general meetings of companies in which the investment managers appointed to the Mercer Funds hold shares across equity portfolios. Engagement reporting will include examples where investment managers have engaged with companies, relating to the number of companies engaged, engagement examples by topic, engagement examples that are collaborative and any voting activity / engagement activities impacting investment decisions, where available. These engagement reviews will extend across equities as well as other asset classes (e.g. fixed income and real estate) in light of the 2020 UK Stewardship Code which calls for engagement across additional asset classes as well as equities.  This report will be available in March 2021 and, once produced, will be reviewed by the Trustee.

The findings from the most recent report, cover the period to 30 June 2019, are set out below:

Vote execution:

  • Vote execution continues to be good overall (i.e. >90% of available votes). Where votes have not been cast the vast majority of managers provide a rationale (typically this relates to market-specific barriers or restrictions).

Vote disclosure:

  • The level of disclosure continues to vary considerably across managers. While in some cases managers have improved in not only disclosing voting rationale at a resolution level, but including summary reporting across categories (e.g. board-related, compensation-related, environmental etc.) there are managers who have not disclosed rationale across all resolutions. It is likely that managers do have this information but have not proactively disclosed it and we will follow-up with these managers to confirm.


  • The results on engagement activities has been relatively consistent and Mercer noted an improvement in the quality of engagement disclosure from a number of managers.
  • Some managers continue to provide market leading engagement reporting – typically those with an established approach to engagement and internal resources dedicated to stewardship.
  • Mercer found that there is still room for improvement on engagement from quant managers who could focus on calling for greater disclosure of ESG metrics and this will again be communicated. Mercer also noted an improvement from a number of quant managers in this regard since the previous review.
  • Mercer will follow up with all managers where improvements are expected in future.

Financial Year Voting Summary

The Trustee has delegated their voting rights to Mercer.  The Trustee does not use the direct services of a proxy voter. All voting rights are exercised by the underlying investment managers appointed by MGIE to manage the Mercer Funds in accordance with their own corporate governance policies, and taking account of current best practice including the UK Corporate Governance Code and the UK Stewardship Code. 

As at 5 October 2020 the Plan had indirect exposure to physical equity through its investment in the below Mercer Funds:

  • Mercer Fundamental Indexations Global Equity CCF
  • Mercer Global Listed Infrastructure Fund
  • Mercer Global Small Cap Equity Fund
  • Mercer Low Volatility Equity Fund
  • Mercer Sustainable Global Equity Fund
  • MGI Emerging Markets Equity Fund
  • MGI Eurozone Equity Fund

A summary of voting behavior across for the Mercer Funds that provide indirect physical equity exposure held in the Plan’s Growth Portfolio is provided overleaf. This reporting cover the 6-month period to 5 October 2020 and includes details of what Mercer considers significant votes.




Fund Investment Manager How many resolutions were you eligible to vote on? What % of eligible resolutions were voted on? 1 What % of voted resolutions were in line with management recommendation? 2 What % of voted resolutions were against management recommendation? 2 What % of votes cast as ‘Abstain’?
Mercer Fundamental Indexations Global Equity CCF MGIE 1,752 94 90 10 0
Mercer Global Listed Infrastructure Fund MGIE 609 100 88 12 3
Mercer Global Small Cap Equity Fund MGIE 7,134 99 93 7 1
Mercer Low Volatility Equity Fund MGIE 6,833 99 93 6 0
Mercer Sustainable Global Equity Fund MGIE 4,518 100 89 10 1
MGI Emerging Markets Equity Fund MGIE 11,786 92 82 17 4
MGI Eurozone Equity Fund MGIE 3,845 99 84 15 2


1Voted resolutions exclude Proposals that were Unvoted or Withheld. 8% of proposals were left unvoted by managers within the MGI Emerging Markets Equity Fund, 97% of which were held by Dimensional Fund Advisors Ltd.
2Voted resolutions with/against management do not include Take No Action, Withheld or Unvoted ballots. These figures may not sum to 100% as management may not recommend a vote direction in all instances.    

Source: Investment managers, data may not sum due to rounding.                





The table below set out examples of significant votes cast over the 6-months to 5 October 2020 by the underlying managers of the Mercer equity funds. The Trustees note that the below votes provide a small sample of votes that may be considered significant.

Mercer Fund Name Underlying Fund Name Category Description Vote Cast With/Against Management
MGI Emerging Markets Equity Fund Mondrian Investment Partners Limited Governance Shareholder Proposal Regarding Independent Chair For Against
Mercer Global Small Cap Equity Fund Arrowstreet Capital, Limited Partnership Social Shareholder Proposal Regarding Lobbying Report For Against
Mercer Low Volatility Equity Fund Acadian Asset Management LLC Environment Shareholder Proposal Regarding Prohibition on Nuclear Power Generation and Decommissioning Against With
Mercer Fundamental Indexations Global Equity CCF Irish Life Investment Managers Limited Social Shareholder Proposal Regarding Animal Welfare For Against
Mercer Sustainable Global Equity Fund State Street Global Advisors (Ireland) Limited Social Shareholder Proposal Regarding Political Contributions and Expenditures Report Abstain Against
Mercer Fundamental Indexations Global Equity CCF Irish Life Investment Managers Limited Governance Shareholder Proposal Regarding Independent Chair For Against


In order to produce this Statement, the Trustee has asked Mercer, in their capacity as investment consultants and investment managers, to provide information on the voting behaviour, including the most significant votes, for the period covered by the Statement.  The information provided is based on the most up to date information that is available to the Trustee as at the date of signing.  For subsequent Statements, the Trustee will have access to the more comprehensive information detailed above.

This Statement was approved and signed by the Trustee on 30 March 2021.