• Carbon footprint metrics now cover 82 per cent of Fund net asset value, compared with around 30 per cent in 2020/21
• Transition and sustainable assets analysis expanded across all asset classes, with approximately £6b of assets under management allocated to sustainable and transition opportunity investments
• Through its stewardship services provider, the PPF engaged with 640 companies last year, with around 38 per cent of outstanding engagement objectives advancing by at least one milestone
• Measurable progress made on transparency and management quality of its Climate Watchlist companies, with 87 per cent meeting disclosure target. Approximately £6bn of assets under management now allocated to sustainable and transition opportunity investments
During the year, the PPF also extended its Transition & Sustainable Assets Framework for Private Markets – first created in 2023 to assess its Infrastructure portfolio. The assessment now covers around £6.8bn across all Private Markets asset classes, giving the PPF a more comprehensive view of transition risks and opportunities alongside the sustainable assets identified in the Public Markets and Forestry portfolios.
Through EOS, its stewardship services provider, the PPF engaged with 640 companies during 2025/26, with around 38 per cent of outstanding engagement objectives progressing by at least one milestone. Private Markets stewardship was further strengthened through deeper manager oversight, improved reporting and detailed transition risk assessments.
A key focus was the PPF’s Climate Watchlist, which comprises 99 companies that together account for at least 70 per cent of its material financed emissions. Of these companies, 87 per cent met the PPF’s carbon emissions disclosure target, while 79 per cent maintained or improved their Transition Pathway Initiative (TPI) Management Quality score.
Across its listed Equity, Credit and UK Credit holdings, total Scope 1 and 2 financed emissions were 62 per cent lower in December 2025 than at the December 2020 baseline. This should be read as a measure of the PPF’s financed emissions rather than real-world decarbonisation, as changes in portfolio composition, market movements and data coverage can all affect the figure.
The report also includes new analysis undertaken with MSCI to improve the PPF’s understanding of physical climate risk. Using holdings-level data across 3,226 listed equity companies, geospatial analysis assessed exposure to climate hazards across more than 340,000 physical assets. It found that companies representing 31 per cent of assets under management in the PPF’s Equity portfolio could face at least one potentially severe physical hazard today. The findings help the PPF identify where further assessment of resilience and adaptation may be needed, although exposure to a physical hazard does not in itself translate into financial impact. The analysis is based on Public Equity holdings as at 31 December 2024.
Claire Curtin, Head of ESG and Sustainability at the Pension Protection Fund, said: “Climate remains one of the most financially significant risks and opportunities we face as long-term investors.”
“Our approach focuses on building better data, improving our understanding of portfolio exposures, and engaging with companies to support credible transition plans. Alongside this, targeted engagement, for example, focusing on our Climate Watchlist of the biggest carbon emitters in our portfolio, helps prioritise effort where it can have the greatest impact.”
The PPF will continue to strengthen its approach to climate risk and stewardship, with priorities for 2026/27 including deeper focus on higher-risk and higher-impact assets, clearer expectations around credible transition planning, and improved use of data and technology. It will also build on work undertaken this year to improve its assessment of Scope 3 emissions across its operational supply chain.
Read the full Sustainability Report 2025/26.
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