The Zoological Society 1988 Pension
SchemeStatement of Investment Principles

Barnett Waddingham LLP
September 2023

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Contents
1

Introduction ..............................................................................................................................................................................................32

Choosing investments ..........................................................................................................................................................................33

Investment objectives ...........................................................................................................................................................................4

4

Kinds of investments to be held .......................................................................................................................................................4

5

The balance between different kinds of investments .............................................................................................................. 4

6

Risks .............................................................................................................................................................................................................57

Expected return on investments.......................................................................................................................................................6

8

Realisation of investments ..................................................................................................................................................................6

9

Financially material considerations, non-financially material considerations, the exercise of voting rights
and engagement activities .................................................................................................................................................................6

10

Policy on arrangements with asset managers ............................................................................................................................ 7

11

Agreement ................................................................................................................................................................................................9

Appendix 1 ...... Financially material considerations, non-financially material considerations, the exercise of voting
rights and engagement activities ........................................................................................................................................................... 10

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1

Introduction

1.1

This is the Statement of Investment Principles prepared by the Trustee of the Zoological Society 1988
Pension Scheme (“the Scheme”). This statement sets down the principles which govern the decisions
about investments that enable the Scheme to meet the requirements of:• the Pensions Act 1995, as amended by the Pensions Act 2004; and• the Occupational Pension Schemes (Investment) Regulations 2005 as amended by the Occupational
Pension Schemes (Investment) (Amendment) Regulations 2010.
• the Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification)
Regulations 2018.
• the Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.

1.2

In preparing this statement the Trustee has consulted the Zoological Society of London, the Sponsor, andobtained advice from Barnett Waddingham LLP, the Trustee’s investment consultant. Barnett
Waddingham is authorised and regulated by the Financial Conduct Authority.

1.3This statement has been prepared with regard to the 2001 Myners review of institutional investment(including subsequent updates), and Scheme Funding legislation.

1.4

The Trustee will review this statement at least every three years or if there is a significant change in any of
the areas covered by the statement.

1.5

The investment powers of the Trustee are set out in Clause 6 of the Consolidating Trust Deed & Rules,
dated 17 December 2004. This statement is consistent with those powers.

1.6

The detail of how the Scheme’s assets are invested, based on the principles set out in this Statement, canbe found in the separate Summary of Investment Arrangements.

2

Choosing investments

2.1

The Trustee’s policy is to set the overall investment target and then monitor the performance of their
managers against that target. In doing so, the Trustee considers the advice of their professional advisers,
who they consider to be suitably qualified and experienced for this role.

2.2

The day-to-day management of the Scheme’s assets is delegated to one or more investment managers.
The Scheme’s investment managers are detailed in the Summary of Investment Arrangements. The
investment managers are authorised and regulated by the Financial Conduct Authority, and are
responsible for stock selection and the exercise of voting rights.

2.3

The Trustee reviews the appropriateness of the Scheme’s investment strategy on an ongoing basis. This
review includes consideration of the continued competence of the investment managers with respect toperformance within any guidelines set. The Trustee will also consult the Sponsor before amending theinvestment strategy.

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Investment objectives

3.1

The Trustee has discussed key investment objectives in light of an analysis of the Scheme’s liability profile
as well as the constraints the Trustee faces in achieving these objectives. As a result, the Trustee’s maininvestment objectives are:• to invest the Scheme’s assets in the best interest of the members and beneficiaries;• to maintain the Scheme’s fully funded position, on the Technical Provisions basis;• to more effectively manage the funding level volatility by seeking opportunities to de-risk the
Scheme’s investment strategy; and• to reduce the likelihood that additional contributions are required from the Scheme Sponsor.

3.2

The Trustee is aware of the relationship that exists between the particular investment portfolio that isheld and the level of funding of the Scheme’s liabilities. The Trustee has obtained exposure toinvestments that they expect will meet the Scheme’s objectives as best as possible.

4 Kinds of investments to be held
4.1

The Scheme is permitted to invest in a wide range of assets including equities, bonds, cash, property, andalternatives.

5

The balance between different kinds of investments

5.1

The Scheme invests in assets that are expected to achieve the Scheme’s objectives. The allocation
between different asset classes is contained within the Summary of Investment Arrangements.

5.2

The Trustee considers the merits of both active and passive management for the various elements of theportfolio and may select different approaches for different asset classes. The current arrangements are
set out in the Summary of Investment Arrangements.

5.3

From time to time the Scheme may hold cash and therefore deviate from its strategic or tactical asset
allocation in order to accommodate any short-term cashflow requirements or any other unexpected
items.

5.4

The Trustee is aware that the appropriate balance between different kinds of investments will vary overtime and therefore the Scheme’s asset allocation will be expected to change as the Scheme’s liability
profile matures.

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6

Risks

6.1

The Trustee has considered the following risks for the Scheme with regard to its investment policy andthe Scheme’s liabilities, and considered ways of managing/monitoring these risks:

Risk versus theliabilities

The Trustee will monitor and review the investment strategy with respect to theliabilities in conjunction with each actuarial valuation. The investment strategy will
be set with consideration to the appropriate level of risk required for the funding
strategy as set out in the Scheme’s Statement of Funding Principles.

Covenant risk

The creditworthiness of the Sponsor and the size of the pension liability relative to
the Sponsor’s financial plans and relevant reserves are monitored on a regularbasis. The appropriate level of investment risk is considered with reference to thestrength of the employer covenant.

Solvency andmismatchingThis risk is addressed through the asset allocation strategy and ongoing triennial
actuarial valuations. The Trustee is aware that the asset allocation required tominimise the volatility of the solvency position may be different from that which
would minimise the volatility on the Scheme’s funding basis.

Asset allocation risk

The asset allocation is detailed in the Summary of Investment Arrangements andis monitored on a regular basis by the Trustee.

Investment
manager risk

The Trustee monitors the performance of each of the Scheme’s investment
managers on a regular basis in addition to having meetings with each manager
from time to time as necessary. The Trustee has a written agreement with each
investment manager, which contains a number of restrictions on how each
investment manager may operate.

Governance risk

Each asset manager is expected to undertake good stewardship and positive
engagement in relation to the assets held. The Trustee monitors these and willreport on the managers’ practices in their annual Implementation Statement.

Environmental,
Social andGovernance(ESG)/Climate risks

The Trustee has considered long-term financial risks to the Scheme and ESG
factors as well as climate risk are potentially financially material and will continue
to develop its policy to consider these, alongside other factors, when selecting orreviewing the Scheme’s investments in order to avoid unexpected losses.

Concentration risk

Each investment manager is expected to manage broadly diversified portfolios
and to spread assets across a number of individual shares and securities.

Liquidity risk

The Scheme invests in assets such that there is a sufficient allocation to liquid
investments that can be converted into cash at short notice given the Scheme’s
cashflow requirements. The Scheme’s administrators assess the level of cash heldin order to limit the impact of the cashflow requirements on the investment
policy.

Currency risk

The Scheme’s liabilities are denominated in sterling. The Scheme may gain
exposure to overseas currencies by investing in assets that are denominated in aforeign currency or via currency management. Currency hedging may be
employed to manage the impact of exchange rate fluctuations.

Loss of investment

The risk of loss of investment by each investment manager and custodian isassessed by the Trustee. This includes losses beyond those caused by market
movements (e.g. default risk, operational errors, or fraud).

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7

Expected return on investments

7.1

The Trustee has regard to the relative investment return and risk that each asset class is expected toprovide. The Trustee is advised by their professional advisors on these matters, who they deem to beappropriately qualified experts. However, the day-to-day selection of investments is delegated to theinvestment managers.

7.2

The Trustee recognises the need to distinguish between nominal and real returns and to makeappropriate allowance for inflation when making decisions and comparisons.

7.3

In considering the expected return from investments, the Trustee recognises that different asset classes
have different long-term expected returns and expected volatilities relative to the liabilities.

7.4

Having established the investment strategy, the Trustee monitors the performance of each investment
manager against an agreed benchmark as frequently as appropriate according to market conditions andthe Scheme’s funding position.

8

Realisation of investments

8.1

The Trustee has delegated the responsibility for buying and selling investments to the investment
managers. The Trustee has considered the risk of liquidity as referred to above.

8.2

The Trustee recognises there may be merits to regular redemptions from the invested assets in order tohelp meet the cashflows needs of the Scheme. If such regular redemptions are made but are insufficient
to meet a shortfall, further disinvestments will be required and the Trustee will seek advice from theirinvestment consultant. In such circumstances, monies will typically be disinvested so that the Scheme’s
asset allocation is moved towards its benchmark allocation.

8.3

Ultimately, the investments will all have to be sold when the Scheme’s life comes to an end. In thissituation, the Trustee is aware of the fact that the realisable value of some investments, were there to bea forced sale, might be lower than the market value shown in the Scheme accounts.

9

Financially material considerations, non-financiallymaterial considerations, the exercise of voting rights andengagement activities

9.1

The Trustee has set policies in relation to these matters. These policies are set out in the Appendix.

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10 Policy on arrangements with asset managers
Incentivising alignment with the Trustee’s investment policies
10.1

Prior to appointing an investment manager, the Trustee discusses the investment manager’s approach tothe management of ESG and climate related risks with the Scheme’s investment consultant, and how
their policies are aligned with the Trustee’s own investment beliefs.

10.2

When appointing an investment manager, in addition to considering the investment manager’s
investment philosophy, process and policies to establish how the manager intends to make the required
investment returns, the Trustee also considers how ESG and climate risk are integrated into these. If theTrustee deems any aspect of these policies to be out of line with their own investment objectives for thepart of the portfolio being considered, they will consider using another manager for the mandate.

10.3

The Trustee carries out a strategy review at least every three years, typically alongside the Actuarial
Valuation, where they assess the continuing relevance of the strategy in the context of the Scheme’s
membership and their aims, beliefs, and constraints. The Trustee monitors the investment managers’
approach to ESG and climate related risks on an annual basis.

10.4

In the event that an investment manager ceases to meet the Trustee’s desired aims, including themanagement of ESG and climate related risks, using the approach expected of them, their appointment
will be terminated. The investment managers have been informed of this by the Trustee.

10.5

Investment manager ESG policies are reviewed in the context of best industry practice and feedback will
be provided to the investment manager.

Incentivising assessments based on medium to long term, financial and non-financial
considerations
10.6

The Trustee is mindful that the impact of ESG and climate change has a long-term nature. However, theTrustee recognises that the potential for change in value as a result of ESG and climate risk may occur
over a much shorter term than climate change itself. The Trustee acknowledges this in their investment
management arrangements.

10.7

When considering the management of objectives for an investment manager (including ESG and climate
risk objectives), and then assessing their effectiveness and performance, the Trustee assesses these over arolling timeframe. The Trustee believes the use of rolling timeframes is consistent with ensuring theinvestment manager makes decisions based on an appropriate time horizon. Where a fund may have an
absolute return or shorter-term target, this is generally supplementary to a longer-term performancetarget. In the case of assets that are actively managed, the Trustee expects this longer-term performancetarget to be sufficient to ensure an appropriate alignment of interests.

10.8

The Trustee expects investment managers to be voting and engaging on behalf of the Scheme’s holdings
and the Scheme monitors this activity within the Implementation Statement in the Scheme’s Annual
Report and Accounts. The Trustee does not expect ESG considerations to be disregarded by theinvestment managers in an effort to achieve any short-term targets.

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Method and time horizon for assessing performance
10.9

The Trustee monitors the performance of their investment managers over medium to long term periods
that are consistent with the Trustee’s investment aims, beliefs and constraints.

10.10 The Scheme invests exclusively in pooled funds. The investment manager is remunerated by the Trustee
based on the assets they manage on behalf of the Trustee. As the funds grow, due to successful
investment by the investment manager, they receive more and as values fall they receive less. In someinstances, a performance fee may also be applied.
10.11 The Trustee believes that this fee structure, including the balance between any fixed and performance
related element, enables the investment manager to focus on long-term performance without worrying
about short term dips in performance significantly affecting their revenue.
10.12 The Trustee asks the Scheme’s investment consultant to assess if the asset management fee is in line withthe market when the manager is selected, and the appropriateness of the annual management charges
are considered regularly as part of the review of the Statement of Investment Principles.

Portfolio turnover costs
10.13 The Trustee acknowledges that portfolio turnover costs can impact on the performance of theirinvestments. Overall performance is assessed as part of the quarterly investment monitoring process.
10.14 During the investment manager appointment process, the Trustees/Trustee may consider both past andanticipated portfolio turnover levels. When underperformance is identified, deviations from the expectedlevel of turnover may be investigated with the investment manager concerned if it is felt they may havebeen a significant contributor to the underperformance. Assessments reflect the market conditions andpeer group practices.
10.15 The Trustee receives MiFID II reporting from the Managers, which provides this information, but does notmonitor portfolio turnover costs and has not set ranges in respect of them. This position is kept underreview.

Duration of arrangement with asset manager
10.16 For the open-ended pooled funds in which the Scheme invests, there are no predetermined terms ofagreement with the investment managers.
10.17 The suitability of the Scheme’s asset allocation and its ongoing alignment with the Trustee’s investment
beliefs is assessed every three years, following Actuarial Valuations, or when changes deem it appropriate
to do so more frequently. As part of this review the ongoing appropriateness of the investment
managers, and the specific funds used, is assessed.

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11 Agreement
11.1

This statement was agreed by the Trustee, and replaces any previous statements. Copies of thisstatement and any subsequent amendments will be made available to the Sponsor, the investment
managers, the Scheme Actuary and the Scheme auditor upon request.

Signed:Date:

On behalf of The Zoological Society 1988 Pension Scheme

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Appendix 1

1

Financially material considerations, nonfinancially material considerations, theexercise of voting rights and engagement
activities

Financially Material Considerations
The Trustee considers that factors such as environmental, social and governance (ESG) issues (including
but not limited to climate change) will be financially material for the Scheme over the length of time
during which the benefits provided by the Scheme for members require to be funded to a level which
would allow the benefits to be bought out with an insurer. This is likely to be not less than five years fromthe date of this Statement of Investment Principles.
The Trustee has elected to invest the Scheme’s assets through pooled funds. The choice of underlying
funds is made by the Trustee after taking advice from their investment consultant. The Trustee, and the
managers of the underlying funds, take into account ESG factors (including climate change risks) in theirdecisions in relation to the selection, retention, and realisation of investments.
The Trustee takes those factors into account in the selection, retention and realisation of investments asfollows:
Selection of investments: assess the investment managers' ESG integration credentials and capabilities,
including stewardship, as a routine part of requests for information/proposals as well as through otherregular reporting channels.
Retention of investments: Developing a robust monitoring process in order to monitor ESG
considerations on an ongoing basis by regularly seeking information on the responsible investing policies
and practices of the investment managers.
Realisation of investments: The Trustee will request information from investment managers about how
ESG considerations are taken into account in decisions to realise investments.
The Trustee will also take those factors into account as part of its investment process to determine astrategic asset allocation, and consider them as part of ongoing reviews of the Scheme’s investments.
The Trustee will continue to monitor and assess ESG factors, and risks and opportunities arising fromthem, as follows:• The Trustee will obtain training at appropriate intervals on ESG considerations in order to understandfully how ESG factors including climate change could impact the Scheme and its investments;• As part of ongoing monitoring of the Scheme’s investment managers, the Trustee will use any ESG
ratings information available within the pensions industry or provided by its investment consultant, toassess how the Scheme’s investment managers take account of ESG issues; and• Through their investment consultant the Trustee will request that all of the Scheme’s investment
managers provide information about their ESG policies, and details of how they integrate ESG into
their investment processes on an annual basis.

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2

Non-financially material considerations
The Trustee does not take into account the views of Scheme members and beneficiaries in relation to
ethical considerations, social and environmental impact, or present and future qualify of life of themembers and beneficiaries of the Scheme (referred to as "non-financial matters" in the relevant
Regulations) in the selection, retention and realisation of investments.

3

The exercise of voting rights
The Trustee’s policy on the exercise of rights attaching to investments, including voting rights, and inundertaking engagement activities in respect of the investments is that these rights should be exercisedby the investment managers on the Trustee’s behalf. In doing so, the Trustee expects that the investment
managers will use their influence as major institutional investors to exercise the Trustee’s rights andduties as shareholders, including where appropriate engaging with underlying investee companies topromote good corporate governance, accountability and to understand how those companies takeaccount of ESG issues in their businesses.
The Trustee will monitor and engage with the investment managers about relevant matters (including
matters concerning an issuer of debt or equity, including their performance, strategy, capital structure,
management of actual or potential conflicts of interest, risks, social and environmental impact andcorporate governance), through the Scheme’s investment consultant.
Investment managers will be asked to provide details of their stewardship policy and engagement
activities on at least an annual basis. The Trustee will, with input from their investment consultant,monitor and review the information provided by the investment managers. Where possible andappropriate, the Trustee will engage with their investment managers for more information and ask themto confirm that their policies comply with the principles set out in the Financial Reporting Council’s UK
Stewardship Code.

4

Engagement activities
The Trustee acknowledges the importance of ESG and climate risk within their investment framework.
When delegating investment decision making to their investment managers, they provide theirinvestment managers with a benchmark they expect the investment managers to either follow oroutperform. The investment manager has discretion over where in an investee company’s capital
structure it invests (subject to the restrictions of the mandate), whether directly or as an asset within apooled fund.
The Trustee is of the belief that ESG and climate risk considerations extend over the entirety of acompany’s corporate structure and activities, i.e. that they apply to equity, credit and property
instruments or holdings. The Trustee also recognises that ESG and climate related issues are constantly
evolving and along with them so too are the products available within the investment management
industry to help manage these risks.
The Trustee considers it to be a part of their investment managers’ roles to assess and monitor
developments in the capital structure for each of the companies in which the managers invest on behalfof the Scheme or as part of the pooled fund in which the Scheme holds units.
The Trustee also considers it to be part of their investment managers’ roles to assess and monitor how
the companies in which they are investing are managing developments in ESG related issues, and in

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particular climate risk, across the relevant parts of the capital structure for each of the companies inwhich the managers invest on behalf of the Scheme.
Should an investment manager be failing in these respects, this should be captured in the Scheme’s
regular performance monitoring.
Through their consultation with the Sponsor when setting this Statement of Investment Principles, theTrustee has made the Sponsor aware of their policy on ESG and climate related risks, how they intend to
manage them and the importance that the pensions industry as a whole, and its regulators, place on
them.
The Scheme’s investment consultant is independent, and no arm of their business provides asset
management services. This, and their FCA Regulated status, makes the Trustee confident that theinvestment manager recommendations they make are free from conflict of interest.
The Trustee expects all investment managers to have a conflict-of-interest policy in relation to their
engagement and ongoing operations. In doing so the Trustee believes they have managed the potential
for conflicts of interest in the appointment of the investment manager and conflicts of interest between
the Trustee/investment manager and the investee companies.
In selecting and reviewing their investment managers, where appropriate, the Trustee will consider
investment managers’ policies on engagement and how these policies have been implemented.

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