Greater Manchester Pension Fund Statement of Compliance with the UK Stewardship Code Principle 1 - Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

The Greater Manchester Pension Fund takes its responsibilities as a shareholder seriously. It seeks to adhere to the Stewardship Code, and encourages its appointed asset managers to do so too. Stewardship is seen as part of the responsibilities of share ownership, and therefore an integral part of the investment strategy.

In practice the Fund’s approach is to apply the Code both through its arrangements with its asset managers and through membership of the Local Authority Pension Fund Forum. The Fund will be amending its Statement of Investment Principles to make this policy/approach explicit when it next reviews that document.

Principle 2 - Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

The Fund encourages the asset managers it employs to have effective policies addressing potential conflicts of interest. In respect of conflicts of interest within the Fund, Management Panel members are required to make declarations of interest at the start of panel meetings.

Principle 3 - Institutional investors should monitor their investee companies.

Day-to-day responsibility for managing our equity holdings is delegated to our appointed asset managers, and the Fund expects them to monitor companies, intervene where necessary, and report back regularly on activity undertaken. Routine written reports from our asset managers on voting and engagement activity are received by the Management Panel on a quarterly basis.  In addition, each appointed external active asset manager reports in detail on its policy and activity in these areas by attending the Fund’s specialist “Ethics and Audit Working Group” on an annual basis.

The Fund subscribes to the research and advisory service of PIRC Ltd.  The Fund also receives an ‘Alerts’ service from the Local Authority Pension Fund Forum which highlights corporate governance issues of concern at investee companies.

Principle 4 - Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.

As highlighted above, responsibility for day-to-day interaction with companies is delegated to the Fund’s asset managers, including the escalation of engagement when necessary. Their guidelines for such activities are expected to be disclosed in their own statement of adherence to the Stewardship Code.

However on occasion, the Fund may itself choose to escalate activity, principally via engagement activity through the Local Authority Pension Fund Forum.

Principle 5 - Institutional investors should be willing to act collectively with other investors where appropriate.

The Fund seeks to work collaboratively with other institutional shareholders in order to maximise the influence that it can have on individual companies. The Fund seeks to achieve this through membership of both the Local Authority Pension Fund Forum, which engages with companies over environmental, social and governance issues, and the Institutional Investor Group on Climate Change, a forum for pension funds and investment managers.

Principle 6 - Institutional investors should have a clear policy on voting and disclosure of voting activity.

In respect of shareholder voting, the Fund exercises all votes attaching to its direct UK equity holdings, and seeks to vote where practical and commercially prudent in respect of direct holdings in overseas markets. Responsibility for the exercise of voting rights has been delegated to the Fund’s appointed asset managers.

In casting the Fund’s votes in the UK, the appointed external active asset managers are mandated to implement the Fund’s bespoke “UK Voting Guidelines”.  These include consideration of company explanations of compliance with the Corporate Governance Code. Any overseas votes exercised must be cast in line with the spirit of the “UK Voting Guidelines”.  The appointed external passive asset manager normally implements its own ‘Voting Policy’.  However the passive asset manager will vote according to the Fund’s instructions on a case by case basis should the Fund so require, in relation to the Fund’s share of assets.  Regular reports are received from the asset managers on how votes have been cast, and controversial issues are discussed at quarterly meetings of the Fund’s specialist “Ethics and Audit Working Group”.

The Fund does not currently disclose any voting data, but is considering its approach to making statistics available via the Fund website.

Principle 7 - Institutional investors should report periodically on their stewardship and voting activities.

The Fund reports annually on its general position vis-à-vis stewardship activity through a specific section on its approach to ethical investments and corporate governance within the report and accounts.

The Fund is considering its approach to the public disclosure and reporting of its voting and engagement activities.

Adopted by the Greater Manchester Pension Fund Management Panel on 4 March 2011.

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