The Nottinghamshire and District Miners’ Pension Scheme 1939 (“the Scheme”)

Annual Engagement Policy Implementation Statement

1.      Introduction

This statement sets out how, and the extent to which the Scheme’s Engagement Policy in the Statement of Investment Principles (“SIP”) produced by the Trustees has been followed during the year to 30 September 2024 (the “Scheme Year”). This statement has been produced in accordance with the Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018, the subsequent amendment in The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019 and the guidance published by the Pensions Regulator.

This statement also includes a summary of the voting activity that was carried out on behalf of the Trustees over the Scheme year by the investment managers.

Section 2 of this statement sets out the investment objectives of the Scheme and whether any changes have been made to the SIP during the Scheme Year. A copy of the SIP is available at www.nmps39.org.uk.

Sections 3 and 4 include information on the engagement and key voting activities of the underlying investment managers of the Scheme, and also sets out how the Scheme’s engagement and voting policy has been followed during the Scheme Year.

2.      Investment Objectives of the Scheme

The Trustees believe it is important to consider the policies in place in the context of the investment objectives they have set. The objectives of the Scheme included in the SIP are as follows:

·        The Trustees aim to invest the Scheme’s assets in the best interests of members and beneficiaries. Within this framework, the investment objectives are twofold:

o   In the absence of future contributions to the Scheme, to invest the assets in such a manner that members’ benefit entitlements can be paid as they fall due.

o   Through a successful investment policy, to further improve the benefits to the Scheme’s beneficiaries.

No revisions were made to the SIP during the Scheme year. The latest version of the SIP was adopted in August 2023. Following the Scheme year end, the SIP was updated in December 2024 to reflect changes to the Scheme’s investment strategy.

The information provided in the following sections highlight the work undertaken by the Trustees during the Scheme year to September 2024 and sets out how this work followed the Trustees’ policies in the SIP. 

In summary, it is the Trustees view that the policies in the SIP have been followed during the Scheme year to September 2024.

3.      Policy on ESG, Stewardship and Climate Change

The Scheme’s SIP includes the Trustees’ policy on Environmental, Social and Governance (‘ESG’) factors, Stewardship and Climate Change. This policy sets out the Trustees’ beliefs on ESG and climate change and the processes followed by the Trustees in relation to voting rights and stewardship. The policy was last reviewed in April 2024 and can be found here: https://www.brewin.co.uk/wp-content/uploads/sites/10/2023/06/stewardship-policy.pdf.

The following work was undertaken during the year to 30 September 2024 relating to the Trustees’ policy on ESG factors, Stewardship and Climate Change, and sets out how the Trustees’ engagement and voting policies were followed and implemented during the year.

The Trustees support the aims of the UK Stewardship Code and its investment managers are encouraged to report their adherence to the Code. Both managers, Schroders and Brewin Dolphin are signatories to the current UK Stewardship Code.

Brewin Dolphin

Brewin Dolphin are members of Climate Action 100+, an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. They also have a separate socially responsible investing (SRI) list for funds which aim to deliver attractive investment returns while contributing positively to global environmental and social challenges.

Brewin Dolphin believe active engagement is key to being a responsible owner, particularly when linked to material issues which might affect the long-term value of their clients’ holdings. Material issues identified via their stewardship monitoring may lead to engagement directly with an investee company, or with a fund manager that is invested in the company. These could include concerns about the company’s strategy, performance, governance, remuneration or approach to risk, and severe controversies including those that may arise from social and environmental matters.

Brewin Dolphin do not prioritise engagement with issuers of direct fixed income securities, as this represents a small proportion of total assets under management across their client base (and for the Scheme’s mandate). Engagement activities are also carried out with managers of collective investment schemes.

Schroders

Schroders group was an early signatory of the UN Principles of Responsible Investment (PRI), supports the UN Global Compact initiative and the Sustainable Development Goals.

Schroders produced a roadmap for their climate transition plans, a document that outlines how they expect to reach net zero across their operations and supply chain. Schroders supports the Task Force on Climate Related Financial Disclosure (TCFD) and encourages companies to report against the key elements of this framework.

4.      Voting Activity and Engagement during the Scheme Year

The Trustees’ policy is to delegate responsibility for the exercising of rights (including voting rights) attaching to the Scheme’s investments to the investment managers.  In addition, it is the Trustees’ policy to obtain reporting on voting and engagement and periodically (on at least an annual basis) review the reports to ensure the policies are being met.

The Trustees have delegated their voting rights to Brewin Dolphin as investment manager of the Scheme’s growth assets. The Scheme’s other investments consist of government issued debt, corporate bonds and securitised credit. As such, voting activities are not applicable for Schroders.

The Trustees will look to discuss voting activity where applicable with their investment managers and/or investment consultant, including how this has been consistent with the managers’ policies on climate change. Over the 12 months to 30 September 2024, the Trustees have not actively challenged the managers on their voting activity.

Brewin Dolphin uses ISS as a proxy voting advisor to receive recommendations on how to vote, aligned with their sustainability voting policy. However, they review carefully the recommendations and make the final decision to execute the vote.

Set out below is a summary of voting activity for this reporting period and a sample of the most significant votes cast on behalf of the Trustees by Brewin Dolphin (i.e. the Scheme’s only investment manager with equity investments).

Key voting activity

The below sets out the meetings at which Brewin Dolphin analysts actively voted on core holdings.

Source: Brewin Dolphin. Year to 31 December 2023

Sample of the most significant votes

Updated guidance was provided by the Department for Work and Pensions (“DWP”) in June 2022, which requires trustees to also define their key stewardship themes / priorities and to report on significant votes in the Engagement Policy Implementation Statement.  

The Trustees define a significant vote as one that is linked to the Scheme’s stewardship priorities/themes. A vote could also be significant for other reasons, e.g. due to the size of holding, however given the nature of the Scheme’s holdings, this is unlikely to be a material consideration for the Trustees as only a minority of the Scheme’s investments are in return seeking assets. The Trustees have set out below their criteria for significant votes, which are aligned to some of the key themes outlined in the United Nation’s Sustainable Development Goals, and are satisfied that these are also captured as high areas of focus in the Brewin Dolphin Stewardship Policy :

·        Environmental (E) – Climate change (e.g. vote on a company’s carbon disclosures)

·        Social (S) – Human rights (e.g. worker conditions, safety and pay)

·        Governance (G) – Corporate Governance (e.g. Board quality, diversity, remuneration and inclusion)

Brewin use ISS as a proxy voting advisor to provide recommendations on how to vote, aligned with their sustainability voting policy. However, Brewin review carefully, make the final decision and execute their own voting. Brewin defines as significant any votes against management, votes not in line with the ISS recommendation, and special meetings of importance.

Having reviewed the information provided by the managers, the Trustees are comfortable with the voting that has been completed on their behalf in relation to the Trustees’ definition of a significant vote, and the managers’ own definitions of a significant vote.

A sample of the most significant votes is provided below:                  

Source: Brewin Dolphin