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14 June 2023

USS publishes Stewardship Code Report 2023

USS is proud to have been a signatory to the Stewardship Code since 2021. We have now submitted our third report to the Financial Reporting Council (FRC), setting out how active stewardship remains an important aspect of our investment approach.

The Code comprises a set of 12 apply and explain Principles for asset managers and asset owners, and each year, our report must evidence how we have applied them. As in previous reports, we describe principle-by-principle how we implement our commitment to being an active steward of the scheme’s assets and summarise our responsible investment (RI) activities and outcomes, with a particular focus on the financial year 2022-23.

New content has been added, particularly case studies covering all asset classes, to bring to life the scheme’s approach to stewardship. We have included information about our new Investment Framework, publication of our 2022 TCFD Report (in line with the globally-accepted framework of the Task Force on Climate-related Financial Disclosures and UK pension regulations) and updates on the progress we are making towards achieving our Net Zero ambition.

This year's report also sets out how we are aiming to be more rigorous in our stewardship by seeking tangible outcomes from our engagement with the companies we invest in. To do this, we have implemented a new Stewardship and Voting Policy. This new approach may see us vote against the reappointment of responsible directors if we believe the company is failing to manage or address an issue appropriately. We would expect to do this where a company has not disclosed its climate transition plan, does not meet our diversity expectations or where executive pay does not align with company performance.

We are making progress on our ambition to be Net Zero by 2050 (if not before), and published our first mandatory TCFD Report in July 2022, which sets out how we are assessing climate risk and reducing carbon emissions in our portfolio. We have established a Net Zero Steering Committee and Net Zero Working Groups for each asset class, to ensure investment teams have a specific focus on the steps they will take to achieve the scheme’s targets.

Our latest Stewardship Code Report includes details of our engagement with banks, as the largest providers of finance to new and expanding fossil fuel projects. USS is supporting the banking engagement initiative led by the Institutional Investors Group on Climate Change (IIGCC), which aims for banks to align with the goals of the Paris Agreement, have suitable climate risk governance in place and improve disclosure on emissions and ratios of green to non-green finance.

The FRC will now assess our report and confirm how we score against each of the Principles. Once our signatory status is confirmed, we will be added to the list published on the FRC website. We will also be publishing our 2023 TCFD Report alongside our Annual Report and Accounts in July, which contains further detail on how we’re working to achieve our Net Zero ambition.

Samantha Wilding, Public Affairs Manager