Transparency data

Homes and Communities Agency Pension Scheme — Annual Engagement Policy Implementation Statement

Updated 4 November 2025

Introduction

Throughout, the ‘Scheme’ refers to the Homes and Communities Agency Pension Scheme.

This statement sets out how, and the extent to which, the Engagement Policy in the Statement of Investment Principles (‘SIP’) produced by the Trustees has been followed during the year to 31 March 2025.

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 2019 and the Statutory and Non-Statutory Guidance published by the Department for Work and Pensions (DWP).

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 main objective of the Trustees is to maintain sufficient future security within the Scheme to ensure the assets cover the defined benefits. Within the context of this objective, the Sponsoring Employer (Sponsor) wishes to minimise cash-flow variation between financial years as far as possible to within an acceptable range, and the Trustees wish to protect members’ benefits. The investment policy therefore reflects a balance between the following:

• a requirement to maintain a reasonable level of investment risk to keep the cost of the benefit accrual at an acceptable level
• a requirement by the Sponsor to be willing to make contributions to assist in the recovery of the funding level as required
• an acceptance by the Trustees that without a government guarantee to fund the Scheme, a continued exposure to equity markets implies members bear a significant part of any risk. However, as part of the 2020 actuarial valuation the Trustees have obtained an updated “letter of comfort” from the Department for Levelling Up, Housing and Communities (DLUHC) (formerly known as the Ministry of Housing, Communities and Local Government (MHCLG)), which has confirmed that it will make sufficient resources available to the Sponsoring Employer to meet its pension liabilities as they fall due (including payments under the current and future Schedule of Contributions and to satisfy Section 75 debt requirements)

Review of the SIP

During the year to 31 March 2025, the Trustees reviewed and updated the Scheme’s SIP in June 2024 to reflect the revised governance arrangements for the Liability Driven Investment (“LDI”) portfolio, namely the move to a segregated mandate.

Post the year end, the Trustees de-risked the Scheme’s investment strategy by switching 5% of assets from the LGIM (Legal & General Investment Management) equity portfolio to the Insight LDI mandate. This strategic change was implemented post year end and therefore will be covered in more detail in next years’ Statement.

The latest SIP can be found online at www.gov.uk/government/publications/homes-communities-agency-pension-scheme-statement-of-investment-principles

Policy on environmental social governance (ESG), stewardship and climate change

The Scheme’s SIP includes the Trustees’ policy on 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.

In summary, the Trustees believe that good stewardship, environmental, social and corporate governance (ESG) issues may have an impact on investment risk and return outcomes, and that good stewardship can create and preserve value for companies and markets as a whole. The Trustees also recognise that long-term sustainability issues, including climate change, present risks and opportunities that increasingly may require explicit consideration. The Trustees have taken into account the expected time horizon of the Scheme when considering how to integrate these issues into the investment decision-making process.

In order to establish their beliefs, the Trustees undertook a review of their ESG ratings and beliefs facilitated by their investment consultant. The session facilitated a discussion of the Scheme’s investment beliefs with respect to ESG and provided further training on climate-related risk metrics. This training was first provided in August 2021.

Following this, the Trustees undertook an additional review of their broader investment beliefs, including their ESG beliefs during 2022. As part of this review, the Trustees updated some of their ESG beliefs to reflect updated views and the policies currently in place.

The Trustees agree to take a proactive approach to understanding and managing the ESG risks within the Scheme’s portfolio.

The following work was undertaken during the year 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.

Engagement

The Trustees recognise that by investing in pooled funds, their investment managers have full discretion when evaluating ESG factors, including climate change considerations, and exercising voting rights and stewardship obligations attached to the Scheme’s investments. This includes undertaking engagement activities, in accordance with their own corporate governance policies and current best practice, including the UK Corporate Governance Code and UK Stewardship Code.

• As in previous years, in June 2024, the Trustees conducted carbon metric analysis on the Scheme’s investments. Specifically, the report focused on Carbon Footprint, Weighted-Average Carbon Intensity, and Absolute Emissions of each mandate compared to the benchmark.  The report also covered key trends in terms of managers and mandates that were most carbon intensive, as well as specific stocks that were adding to the overall carbon footprint of the Scheme’s investments.  This provided the Trustees with information to engage with the investment managers at review meetings. In particular, the Trustees engaged with 1 of the Scheme’s multi-asset credit managers over the year as the mandate held a number of the Scheme’s highest carbon emitters.  The Trustees are due to complete a similar report post-year end and this will be reported on within next years’ statement.

• In June 2024, the Trustees conducted an annual ESG review of the Scheme’s investment managers, in which they assessed the managers against their respective investment universe.

• In September 2024, the Trustees also reassessed how well the Scheme is currently integrating ESG considerations through the investment consultant’s Responsible Investment Total Evaluation (RITE) review. This considered the Trustees’ responsible investment beliefs, policy, process and portfolio against best practice and considered potential interventions to improve responsible investment integration. For example, implementing further allocations to strategies that have a greater focus on ESG, or those focused on biodiversity and nature, and the further development of stewardship policies and priorities. The output from this evaluation was also compared with the previous years’ results to assess how actions taken over the year have impacted the final score for the Scheme.

• The Trustees have previously agreed that, where possible, for any new mandates implemented in the future, the manager’s approach to ESG considerations would be considered as a factor in the decision-making process. The Trustees also agreed that, where incumbent managers of the Scheme launch similar strategies, with a greater ESG integration focus, to the main strategy that the Scheme already invests in, the Trustees will assess the ‘ESG tilted’ strategy, including on risk, return and cost grounds, and decide whether to move to the alternative strategy.

• The Trustees have reviewed their investment managers’ compliance with the principles of the UK Stewardship Code as part of this statement and will continue to do so annually. All the Scheme’s investment managers confirmed that they are signatories of the current UK Stewardship Code. The Trustees will continue to engage with all of their managers on the UK Stewardship Code and its relevance. All of the Scheme’s investment managers confirmed that they are signatories of UN Principles for Responsible Investment.

• The Scheme’s investment performance report is reviewed by the Trustees on a quarterly basis — this includes ratings (both general and specific to ESG) from the investment consultant. All of the managers remained highly rated during the year. The investment performance report includes how each investment manager is delivering against their specific mandates. Where a manager is not performing in line with expectations, the Trustees invite the manager to present to the Trustees in order to understand the performance and outlook for the mandate.

• The Trustees also requested details of relevant engagement activity for the year from each of the Scheme’s investment managers.

• The Scheme’s managers provided examples of instances if they had engaged with companies they were invested in and about to invest in which resulted in a positive outcome. These engagement initiatives were driven mainly through regular engagement meetings with the companies that the managers invest in, or by voting on ESG-related resolutions at companies’ Annual General Meetings.

  • LGIM: over the year, LGIM engaged with companies, regulators and policymakers, to generate sustainable outcomes. They see constructive engagement as the best way to deliver long-term and systemic change.
    
    
    • LGIM have confirmed that they carried out 2,027 engagements with underlying Companies across Environmental, Social and Governance issues over the year. Of the engagements focused on “environmental” issues, around 66% of which were related to climate change.  For example, LGIM contacted JPMorgan Chase & Co as part of their Climate Impact Pledge engagement campaign. The company has made commitments to set targets to transition to net zero greenhouse gas emissions by 2050 or sooner, and to set interim targets for 2030, consistent with a 1.5°C trajectory. Under LGIM’s Climate Impact Pledge, LGIM have had in-depth discussions with the company on their coal policy, their scope 3 emissions and the sectors to which their 1.5°C alignment applies.
  • Oakhill: over the year, Oakhill engaged (43 times) with underlying issuers on various topics such as including carbon footprint and Greenhouse Gas emissions targets, Diversity, Equity and Inclusion initiatives, health and safety and local community relations.
    
    
    • For example, Oakhill engaged with Alkegen, a specialty material manufacturer over the year to discuss its evolving focus and progress on ESG initiatives and regulatory compliance, as well as company targets and supply chain management. The Company was receptive to discussing ESG best practices and expressed interest in engaging with Oakhill’s benchmarking data on discussed topics, such as safety, water and waste management, and supply chain viability. Further, Alkegen welcomed the opportunity to speak with Oakhill’s relevant portfolio companies to provide ESG insights and support and to collaborate to overcome industry-wide obstacles. Following the call, Oakhill sent Alkegen industry-specific benchmarking data to help assess others in the industry and promote strategies for improvement. Alkegen addressed all the topics raised at the beginning of the engagement and the objective for the engagement was fully met and exceeded. Ongoing monitoring and engagement with the issuer are expected to continue throughout the life of the investment. The account continues to be holders of the Company’s credit.
  • M&G: over the year, M&G engaged with companies on a wide range of ESG issues. They believe that the long-term success of companies is supported by effective investor stewardship and high standards of corporate governance. They believe that if a company is run well, and sustainably, it is more likely to be successful in the long run.
    
    
    • For example, M&G engaged with Capital One Financial Corporation during the year to encourage the company to set a scope 2 emissions reduction target (it currently has scope 1 and scope 3 targets). M&G also encouraged them to publish their scope 3 category 15 emissions and to include them in its scope 3 target. Capital One currently reports 100% renewable energy use, primarily through Renewable Energy Certificates (REC) with a degree of onsite, and as such felt that a scope 2 target was inappropriate. Having previously spoken with the Science Based Target Initiative and its approach, which informed M&G that ‘maintenance targets’ could be set in these circumstances, M&G suggested that the company publish such a target to help ensure it would remain focused on renewable sourcing. Capital One were not aware of the maintenance targets and said this would be considered. In terms of category 15 ‘financed emissions’, Capital One informed M&G that it was currently in the second generation of estimating those emissions, and that it would be publishing the number once they were confident with the calculation.
  • Insight: over the year to 31 March 2025 Insight confirmed it conducted 939 engagements over 900 separate engagement meetings at the firm level. In determining the nature and objectives of an engagement relating to ESG factors, Insight adopt a Double Materiality Framework, whereby their approach is to categorise different themes to describe whether they have a greater impact in terms of their Financial Materiality or their Environmental and Social Materiality.
    
    
    • For example, Insight engaged with European Data Warehouse (EDW) around the improvement of data analytics. They met with the key account manager at EDW and suggested the introduction of a data aggregation tool to pool information on public deals on the same parameters, such as the EPC rating across a residential collateral pool.  The engagement was led by a portfolio manager and analyst within their secured finance team.

Significant votes

DWP released a set of Implementation Statement requirements on 17 June 2022, ‘Reporting on Stewardship and Other Topics through the Statement of Investment Principles and the Implementation Statement: Statutory and Non-Statutory Guidance’ to be adopted in all Implementation Statements for schemes with years on or after 1 October 2022. The most material change was that the Statutory Guidance provides an update on what constitutes a “significant vote”:

• a significant vote is defined as one that is linked to the Scheme’s stewardship priorities or themes
• a vote could also be significant for other reasons, for example, due to the size of holding

Trustees are to include details on why a vote is considered significant and rationale for voting decision.

The Trustees define a significant vote as one which aligns with the broader Environmental, Social and Governance themes, narrowed down by size of holding (in particular votes in relation to the top 5 holdings within the equity fund) during the period from 31 March 2024 to 31 March 2025.

Voting activity

The Trustees have delegated their voting rights to the investment managers. 

Investment managers are expected to provide voting summary reporting (where applicable) on a regular basis, at least annually. 

The Trustees expect to be more active in challenging the investment managers in relation to voting and engagement in the future. It is expected that, when the investment managers present to the Trustees at future meetings, the Trustees will ask the investment managers to highlight key voting activity and the impact on the portfolio. 

The Trustees do not use the direct services of a proxy voter.  Over the last 12 months the key voting activity within the equity mandates were as follows:

LGIM — Future World Global Equity and Future World Global Equity Hedged

• LGIM were eligible to vote at 5,515 meetings over the year. There were a total of 55,096 resolutions on which LGIM were eligible to vote.
• LGIM has participated in the vote for 99.8% of these resolutions. In 81.0% of these, LGIM voted in support of management, while voting against on 17.9% of the proposals and abstaining from 1.1%.

• Of the top 5 holdings in the Fund (Amazon, Alphabet, Apple, Microsoft, and NVIDIA), LGIM participated in a substantial number of votes across (greater than 100) across each of the companies over the year to 31 March 2025. LGIM have shared information on the votes cast at the respective Annual General Meetings for each of these companies. An example of some of the votes are outlined here:

• Amazon AGM on 24 May 2024 — LGIM cast 28 separate votes covering environmental, social and governance issues, an example of each is highlighted.

  • (Governance) — LGIM voted for (against management) to establish a public policy committee, LGIM voted in favour of this proposal as it supports increased transparency and understanding regarding the company’s involvement in lobbying and public policy. Whilst LGIM do not consider a separate committee may be required for this purpose, support is still warranted at this time to promote additional transparency.

  • (Environmental) — LGIM voted for (against management) a report on efforts to reduce plastic use. LGIM supports enhanced transparency and disclosure regarding the company’s climate actions, particularly around packaging-based waste and emissions reduction.

  • (Social) — LGIM voted for (against management) the commission of a third party study and report on risk associated with Rekognition. LGIM supports such risk assessments as they consider human rights issues to be material risk to companies.

• Apple: AGM on 23 May 2024 and 25 February 2025 — LGIM cast 26 separate votes largely covering Social and Governance issues, an example of each is highlighted.

  • (Social) — LGIM voted against (in line with management) a report on ethical artificial intelligence (AI) data acquisition and usage. LGIM voted against as the company takes sufficient measures to protect users’ data in the development and training of its artificial intelligence models. However, concerns remain over the company’s lack of transparency on its risk management processes to ensure safe applications of AI, such as identifying high-risk inputs in its model and mitigation measures to prevent harmful content generation. LGIM felt these concerns were not addressed in this resolution and therefore have voted against but have communicated their views to the company via dialogue.

  • (Governance) — LGIM voted for (against management) ratifying named executive officers’ compensation. LGIM voted against as awards are permitted to vest for below median relative performance which therefore fails the pay for performance hurdle. The company had set only 1 performance metric to reward management for long-term performance. LGIM believe that one metric does not by itself provide sufficient evidence of the overall long-term performance of the company.

• Meta Platforms A on 29 May 2024 — LGIM cast 23 separate votes largely covering Environmental, Social and Governance issues, an example of each is highlighted.

  • (Governance) — LGIM voted for (against management) the amendment of corporate governance guidelines. LGIM voted in favour as they believe it would enhance the lead independent director duties.

  • (Environmental) — LGIM voted for (against management) reporting on framework to assess company lobbying, in alignment with climate-related goals. LGIM voted in favour as they encourage all companies to report their climate lobbying activity in line with global standards on responsible corporate climate lobbying.

  • (Social) — LGIM voted for (against management) a report on human right impact assessment of targeted advertising. LGIM voted in favour as they support such risk assessments and they consider human rights issues to be a material risk to companies.

• Microsoft AGM on 10 December 2024 — LGIM cast 20 separate votes largely covering Social and Governance issues, an example of each is highlighted.

  • (Governance) — LGIM voted against (against management) ratifying Deloitte & Touche LLP as Auditors. LGIM voted against as they expect the role of the external auditor to be put to tender on a regular basis.

  • (Social) — LGIM voted for (against management) a report on the risks of operating in countries with significant human rights concerns. LGIM believes that shareholder would benefit from increased disclosure regarding how the company is managing human right-related risks in high-risk countries.

• NVIDIA Corporation AGM on 26 June 2024 — LGIM cast 15 separate votes largely covering Governance issues, an example is highlighted.

  • (Governance) — LGIM voted against (against management) ratifying a named executive’s compensation as LGIM expects all incentives to be subject to clawback if the vested award is later deemed to be unjustified. They also voted against as they don’t believe that awards should be permitted for below median performance.