The Devon Pension Fund places a strong emphasis on the rights and responsibilities that attach to being a shareholder and will play an active role in overseeing the management of the companies in which it invests.

Companies that are well managed with a sustainable business model are more likely to achieve the investment returns that the Fund requires. The Fund will therefore seek to engage in collaboration with the Brunel Pension Partnership and its fund managers and other partners to promote good management and sustainable business models, and use its votes at company meetings accordingly.

In February 2023 the Fund was re-accredited by the Financial Reporting Council (FRC) as a signatory to the UK Stewardship Code 2020. This follows an assessment of the Fund’s stewardship and engagement policies and activity reported in the Pension Fund Annual Report for 2021/22.

The Code sets high stewardship standards for asset owners and asset managers, and for service providers that support them. The FRC commented that they were pleased to see improvements in reporting from the previous year.

Company Engagement

A breakdown of the number of companies engaged with by Brunel on behalf of the Devon Fund during each quarter over the last year, by region and the type of issues engaged on is shown in the following charts:

Number of Companies Engaged With, By Region

Pie chart showing number of companies engaged with by geography: UK 46 Europe Ex UK 109 North America 219 Asia Pacific (incl. Japan) 46 Emerging Markets 37 Pie chart showing number of companies engaged with July-Sept 2022 - UK 25 Europe Ex UK 44 North America 70 Asia Pacific (incl. Japan) 17 Emerging Markets 18 Pie chart showing number of companies engaged with October to December 2022: UK 22 Europe Ex UK 49 North America 101 Asia Pacific (incl. Japan) 49 Emerging Markets 14Pie chart showing number of companies engaged with January to March 2023: UK 27 Europe Ex UK 89 North America 145 Asia Pacific (incl. Japan) 45 Emerging Markets 20

Breakdown of Issues Engaged On

Pie chart showing the issues engaged on April to June 2022: Environmental 28.0% Social and Ethical 18.3% Governance 43.7% Strategy Risk and Communication 10.0% Pie chart showing issues engaged on July to September 2022: Environmental 39.1% Social and Ethical 28.8% Governance 18.6% Strategy Risk and Communication 13.5% Pie chart showing issues engaged on October to December 2022: Environmental 40.1% Social and Ethical 28.5% Governance 21.3% Strategy Risk and Communication 10.1%Pie chart showing issues engaged on January to March 2023: Environmental 36.1% Social and Ethical 28.4% Governance 24.8% Strategy Risk and Communication 10.7%

Voting Activity

Voting on the Fund’s equity shares is delegated to the Brunel Pension Partnership, and for the Fund’s passive investments to Legal and General Investment Management (LGIM). The Devon Fund requires that Brunel will always seek to exercise its rights as shareholders through voting on all resolutions at company general meetings.

Brunel actively vote the shares held within their funds on behalf of their client funds, including Devon. For the passive equity allocation Legal and General Investment Management (LGIM) manage the investments and voting on the shares is delegated to them. On significant issues, Brunel may request that their shares are split out and a different vote made. The votes cast by the Fund’s investment managers during the year in respect of the Devon Fund’s investments are set out in the table below. The passive portfolios managed by LGIM are shown separately from Brunel’s voting on active portfolios.

Manager / Portfolios Number of Meetings Number of Resolutions Votes Against Management
Brunel Passive Portfolios (LGIM) 3,383 45,974 9,554
Brunel Active Portfolios 949 11,097 2,040

The passive portfolios will include all the companies in the relevant indexes, so there will be more meetings and more resolutions to vote on than for the actively managed portfolios. The votes against management recommendations will reflect matters where there is concern that the company is not addressing the issue concerned and managing it effectively. The Devon Fund would expect that these votes against management should be primarily on the priority areas set out in the Fund’s Investment Strategy Statement. An analysis of the issues where votes have been cast against management recommendations is set out below.

Votes Cast Against Management Recommendation by Issue 2022/23

Pie chart showing votes against management by issue for active Brunel portfolios: Board Stucture 920 Remuneration 441 Shareholder Resolutions 297 Capital Structure and Dividends 153 Amend Articles 95 Audit and accounts 65 Investment, mergers and acquisitions 17 Other 52

Pie chart showing votes v management for LGIM passive funds: Board Stucture 5046 Remuneration 2344 Capital Structure and Dividends 299 Audit and accounts 148 Environmental/Climate 161 Social/Human Rights/Diversity 128 Corporate Governance 105 Restructuring/M&A 93 Other 1230

For more details on the Fund’s stewardship and engagement activities in the Pension Fund Annual Report at Important documents – Devon Pension Fund