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Canada Life UK Division Staff Pension Fund Engagement Policy Implementation Statement

This sets out the actions undertaken by the Trustee, its service providers and investment manager, to
implement the stewardship policy set out in the Statement of Investment Principles (“SIP”).

Statement of Compliance with the Canada Life UK Division Staff Pension Fund’s Stewardship Policy for the year ending 31 December 2022.


This statement is prepared on behalf of the Trustee of the Canada Life UK Division Staff Pension Fund (the “Trustee”) in its capacity as Trustee of the Canada Life UK Division Staff Pension Fund (the “Fund”) in accordance with the requirements of the Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019. This statement sets out how the Trustee has complied with the Fund’s Stewardship Policy during the period from 1 January 2022 to 31 December 2022.

Changes to the SIP over the year to 31 December 2022

The Statement of Investment Principles (SIP) was reviewed and revised a number of times over the course of 2022 to allow for the strategy changes over the year. The changes adopted included:

  • Updates to the strategic target allocations to Growth and Matching assets, along with updated best estimate investment returns as the Fund de-risked the investment strategy; and
  • An update to the matching portfolio composition to reflect the increased hedging level targets.

Stewardship Policy

The Trustee’s Stewardship (voting and engagement) Policy sets out how the Trustee will behave as an active owner of the Fund’s assets which includes the Trustee’s approach to;

  • the exercise of voting rights attached to assets; and
  • undertaking engagement activity, including how the Trustee monitors and engages with its investment
    manager and any other stakeholders.

The Fund’s Stewardship Policy is reviewed on an annual basis in line with the Fund’s Statement of Investment
Principles (SIP) review which was last updated in December 2022.

The stewardship policies in the Fund’s SIP are related below:

The Trustee recognises the importance of its role as a steward of capital and the need to ensure the highest standards of governance and promoting corporate responsibility in the underlying companies in which its investments reside. The Trustee recognises that ultimately this protects the financial interests of the Fund and its beneficiaries.

The Trustee expects the Fund's Investment Manager to use their influence as major institutional investors to carry out the Trustee’s rights and duties as a shareholder including voting, along with – where relevant and appropriate – engaging with underlying investee companies to promote good corporate governance, accountability, and positive change.

The Trustee regularly reviews the suitability of the Fund’s appointed asset managers and take advice from their investment consultant regarding any changes. This advice includes consideration of broader stewardship matters and the exercise of voting rights by the appointed managers. If an incumbent manager is found to be falling short of the standards the Trustee has set out in its policy, the Trustee aims to engage with the manager and seek a more sustainable position but may look to replace the manager.

The Trustee reviews the stewardship activities of their asset managers on an annual basis, covering both engagement and voting actions. The Trustee will review the alignment of its policies to those of the Fund’s asset managers and ensure their managers, or other third parties, use their influence as major institutional investors to carry out the Trustee’s rights and duties as a responsible shareholder and asset owner.

The Trustee will engage with its investment managers as necessary for more information, to ensure that robust active ownership behaviours, reflective of their active ownership policies, are being actioned.

The Trustee expects the Fund’s appointed asset managers to comply with the United Nations Global Compact, UK Stewardship Code and TCFD Recommendations.

The transparency for voting should include voting actions and rationale with relevance to the Fund, in particular, where: votes were cast against management; votes against management generally were significant, votes were abstained; voting differed from the voting policy of either the Trustee or the asset manager.

Where a significant concern is identified, the Trustee will consider the circumstances on a case-by-case basis and
a range of methods by which it would monitor and engage with an issuer of debt or equity, an asset manager or another holder of debt or equity, and other stakeholders. The Trustee may engage on matters concerning an issuer of debt or equity, including their performance, strategy, risks, social and environmental impact and corporate governance, the capital structure, and management of actual or potential conflicts of interest.

Furthermore, the investment managers are challenged directly by the Trustee and by their investment advisers on the impact of any significant issues, including where appropriate, ESG issues that may impact the prospects for the return from the portfolio, on a biannual basis at Trustee meetings.

The Trustee separately considers any conflicts of interest arising in the management of the Fund and its investments and has ensured that the investment manager has an appropriate conflicts of interest policy in place.

You can review the Fund Stewardship Policy which can be found within the Fund’s Statement of Investment Principles, at:

The Trustee also monitors their compliance with their Stewardship Policy on a regular basis and are satisfied that they have complied with the Fund’s Stewardship Policy over the last year. Throughout this Statement, the Trustee reviews how the actions of the Fund's investment manager have aligned with the expectations and principles set out in the SIP.

Manager Voting and Engagement Approach

The Fund's assets are held in a policy issued by Canada Life Limited ("CLL") and managed by Canada Life Asset Management ("CLAM"). CLAM has named portfolio managers across a range of asset classes to invest the assets of the Fund in line with the strategic asset allocation.

CLAM manage Environmental Social and Governance ("ESG") risks in three ways: integrating ESG research into investment decisions, voting and engagement.

The Trustee has delegated voting and engagement activity in respect of the underlying assets to CLAM. The Trustee believes it is important that their investment manager take an active role in the supervision of the companies in which they invest, both by voting at shareholder meetings and engaging with the management on issues which affect a company’s financial performance.

Ongoing monitoring

The Trustee receives, on a semi-annual basis, monitoring reports from its Investment Manager outlining the valuation of all investments held, the performance of these investments and any transactions made during the quarter. Investment returns are compared against appropriate performance objectives to monitor the relative performance of these investments. The Trustee monitors and challenges where necessary.

The Trustee seeks to ensure that their managers are exercising voting rights and where appropriate, to monitor managers voting patterns. The Trustee also monitors the investment manager’s voting on particular companies or issues that affect more than one company. CLAM's quarterly voting record is available online as is their stewardship and engagement policy. The Trustee meets regularly with CLAM where CLAM provide verbal updates. This allows the Trustee to consider CLAM’s exercise of their stewardship.


CLAM use research services to ensure that ESG risks are properly assessed and monitored. Examples include a company’s contribution to climate change, the impacts of a company’s activities on natural resources and the production and disposal of hazardous waste. The social risks that may be considered include poor working and safety conditions, bribery and corruption, denial of labour rights, controversial sourcing in the supply chain and product liability issues.

Voting activity

The Trustee seeks to ensure that their managers are exercising voting rights and where appropriate, to monitor managers voting patterns. The Trustee also monitors the investment manager’s voting on particular companies or issues that affect more than one company.

CLAM view voting as an important way in which they can join other investors in holding company management to account. They regularly vote against management on governance issues such as excessive or poorly structured remuneration, lack of board independence or the absence of separation between the roles of chair and chief executive. CLAM will also often join other investors in voting for shareholder resolutions which focus on social and environmental issues such as workers’ rights or the environmental impact of their activities.

CLAM updated its Engagement Policy over 2020 as a result of the integration of tools and insights delivered by external third-party providers, including Sustainalytics, Institutional Shareholder Services ("ISS") Climate Change Solutions and ISS Pooled Engagement and to include enhancements to incorporate voting principles. The ISS Pooled Engagement service allows the manager to participate and initiate collective engagement activities with companies invested in, whilst also allowing the manager to add its voice to engagements with other companies, thus improving governance of companies globally.

The manager uses the proxy advice services of ISS and assesses its guidance and advice in a timely manner so that voting decisions are properly recorded (to the extent possible) before shareholder meetings. The voting principles which they follow are set out in the manager's Engagement Policy. CLAM define a ‘significant vote’ as one in which they vote against management recommendations.

The Trustee holds equity assets through two regional mandates managed by CLAM. CLAM have reported on how votes were cast in each of these mandates as set out in the table below over the 12 months to 31 December 2022:

Strategy/Fund name UK Equity Fund Global Equity Fund
Proportion of total Canada Life UK Division Staff
Pension Fund assets %
5.4% 13.6%
No. of meetings eligible to vote at during the year 75 102
No. of resolutions eligible to vote on during the year 1397 1573
% of resolutions voted 100.0% 100.0%
% of resolutions voted with management 98.4% 87.9%
% of resolutions voted against management 1.6% 10.7%
% of resolutions abstained 0.1% 0.1%
% of meetings with at least one vote against
17.3% 52.0%

The top three categories that CLAM voted against management for the Global Equity Fund were director elections (24.1%), social issues (26.5%) and compensation (16.5%). For the UK Equity Fund the top three categories that CLAM voted against management were compensation (47.8%), director elections (26.1%) and capitalisation (17.4%).

On a quarterly basis, CLAM publicly detail summaries of the number of meetings voted, resolutions and votes for/against/unvoted and provide the reason for votes against management on a given date. Voting information can be found at:

Engagement activity

CLAM will seek to engage with companies both individually and alongside other investors when they feel that a company’s management has not properly addressed ESG risks to their businesses.

Monitoring, dialogue and voting processes occasionally highlight areas of concern to CLAM. If the manager believes a decision or proposal by company management will negatively affect the company’s long-term investment potential, the portfolio manager may remove the holding from their portfolios. When the manager deems fit to escalate their activities, they would do so via meetings or conversations between investment managers and company management. Following a meeting, they would monitor the company’s response to ensure that steps are taken to address the issues raised.

CLAM participated in 229 engagements during the period. From these, 27 written responses were received, and 202 meetings were held.

Canada Life publicly detail the dates and companies engaged with on a quarterly basis.

Further information on the CLAM annual engagement report, engagement policy, integration of UK Stewardship Code principles in the investment process (including a full record of voting decisions) can be found here:

Voting and Engagement examples

Over the period, the Fund was invested in two equity and one property fund as well as individual bonds and gilts, cash and a liquidity fund. This section provides an overview of the voting and engagement examples to illustrate the stewardship activity carried out in relation the Fund's invested assets. 

Equity and Fixed Income collaborative engagement example: Walmart
Walmart is flagged for both environmental and social concerns. Environmental challenges include water use and water scarcity, waste and greenhouse gas emissions from its operations and supply chain. It has also faced challenges around human rights in its supply chain and labour standards violations and controversies. To address such a diverse range of concerns in a single large global issuer CLAM deployed their proprietary engagement tracking tool to establish priorities and different engagement channels to achieve specific goals.

In 2022, CLAM wanted to develop engagement and increase the pressure on this issuer. Given Walmart's scale and investor base, CLAM decided to seek a collaborative route to escalate engagement on climate issues to amplify their voice. CLAM joined the CA100+ engagement workstream and have since been leveraging participation to dedicate special attention to themes such as scope 3 emissions, the issuer's carbon reduction collaboration with its global value chain, CA100+ Benchmark Performance, and land use and deforestation. CLAM have provided commentary on agendas and invested in understanding the priorities of this mature and long-running collaborative engagement. CLAM sought to begin a bilateral engagement with the company to increase the pressure on it on specific environmental concerns including waste, energy management and the environmental impacts of its supply chain. CLAM leveraged the CA100+ work and their own proprietary research to reinforce and escalate views. This resulted in an introductory written exchange with Walmart.

Using their bilateral engagement workstream, CLAM also sought to raise concerns with the company around labour practices and social issues in its supply chain. During 2022, they supported another shareholder resolution calling for a report on its animal welfare policies and practices, in the food supply chain, in support of this activity.

Equity voting example: Johnson & Johnson - Shareholder resolution on governance
CLAM voted in favour of a shareholder proposal requesting that the compensation committee should consider the pay grades, salary ranges, and stock ownership incentives of company employees when setting the on-target remuneration of the CEO. The shareholder resolution argued that setting CEO compensation without considering employee compensation has led to inequality, with a ratio of the CEO's annual total compensation to median employee annual total compensation of 365:1.

CLAM’s views is the ratio of CEO compensation to median employee compensation is extreme, even by the elevated levels of executive pay in the United States. They voted against the advice of ISS, which backed management who argued that its disclosure practices were in line with industry norms so it should not be required to go beyond them. However, CLAM believes such an extreme pay disparity between the CEO and the median employee was outside expectations and industry norms. Further, CLAM’s view is that it is not conducive to managing reputational risk or fostering positive employee relations.

CLAM felt that the shareholder resolution would encourage the compensation committee to consider more carefully the method by which they calculate executive pay and to be more transparent regarding its methodology. In accordance with their voting policy, CLAM looks for clearly structured, transparent remuneration packages tied to long-term value creation rather than short-term results. The shareholder resolution was defeated.

Equity engagement example: JPMorgan Chase & Co - non-binding vote on executive pay
In May 2022, the management of JPMorgan Chase & Co put its senior management pay proposal to the shareholders of the company. This was then the subject of a non-binding shareholder vote. The package included $201.8m for six senior executives, including a special award in excess of $50m for the company’s CEO, Jamie Dimon. The one-off payment was designed to incentivise Dimon to stay in position for at least five more years.

Dimon is highly regarded by CLAM, however they considered the one-off nature of this payment to be insufficiently linked to performance. Alongside a majority of other shareholders, they voted against the nonbinding resolution and in line with ISS's advice. CLAM expects the remuneration of the directors of investee companies to be closely linked to performance. ISS criticised the options as lacking performance criteria for vesting.

CLAM hopes that the management of JPMorgan Chase & Co takes the views of the shareholders, clearly expressed in this non-binding vote, into account when setting future pay proposals for its executives. CLAM continue to hold this stock but will carefully scrutinise future remuneration proposals put forward by the company.  

Fixed Income & Real Estate
While equity managers may have more direct influence on the companies they invest in, fixed income managers are also increasingly influential in their ability to encourage positive change. CLAM are a signatory to the UK Money Market Code.

The Trustee recognises that the investment processes of alternative investments such as real estate mean that stewardship may be less applicable or have a less tangible financial benefit. Nonetheless, the Trustee still expects that, in line with the SIP for the relevant period, portfolio managers within the arrangement should engage with external parties should they identify concerns that may be material.

CLAM believe that attention to ESG in the management of real estate reduces project risk, builds social support and generates value. Such risks are assessed through their environmental management system (EMS) which has been established and aligned to the internationally recognised standard. It assists in the development and continual improvement of environmental performance to the benefit of the business, stakeholders and the wider society.

For the real estate portfolio, CLAM employ a specialist environmental consultant who supported preparing and publishing a detailed Real Estate ESG Policy. Specific detailed engagement case studies were not provided by the manager in relation to fixed income and property, though CLAM publicly disclose quarterly engagement summaries at a firm level, as noted above, and the investment manager confirmed that the themes raised with investee companies are addressed in manager meetings across fixed income and real estate (where applicable).

In Summary

Based on the activity over the year by the Trustee and its service providers, the Trustee is of the opinion that the stewardship policy was implemented effectively in practice. The Trustee notes that the investment manager was able to disclose evidence of voting and engagement activity at a firm level. 

The Trustee, along with its investment consultant, has developed a separate Responsible Investment Policy which covers all aspects of Responsible Investment including Stewardship. This policy goes into greater detail than the Stewardship Policy in the SIP.

The Trustee acknowledges that stewardship may be less applicable to certain asset classes and were encouraged that across asset classes, portfolio managers were incorporating responsible investment and ESG considerations in their investment processes.

Employer related investments

The investments of the Fund are invested in accordance with Section 40 of the Pensions Act 1995. Details of any Employer related investments are disclosed in note 22 to the financial statements.