01 03.5 Influencing companies through proxy voting continued Principles 7 11 12 Introduction 02 Sustainable investing 03 Examples of our voting in 2021 We continue to have particular concerns about some by the company. As an outcome of reviewing our voting Active stewardship Mining company’s first Say on Climate vote Chinese companies and voted against 60% of all pattern for 2021, we will include this specific issue in our Following extensive engagement with a mining audit-related proposals in China. We expect higher annual review of our Corporate Governance Guidelines 03.1 Our engagement approach transparency when it comes to the breakdown of in 2022, to assess whether a more nuanced approach is 03.2 Engagement outcomes company, bilaterally and through CA100+, we supported audit fees and explanation of any non-audit services. appropriate in the US. by theme management on its first Say on Climate vote. Our view In China, we often observe that executive directors 03.3 Collaborative engagements was that the company made significant progress towards are proposed as chair of Audit or Compensation Exercising our rights and responsibilities 03.4 E scalation where initial aligning strategy and ambitions with a net-zero Committees. Such practices would seriously harm the beyond equities engagement is not enough outcome. Despite the existence of material limitations independence and objectivity of the committees’ work Exercising voting rights is typically limited to equity 03.5 Influencing companies through (eg, only partial inclusion of Scope 3 emissions) support and give rise to conflicts of interest. We believe that the holdings. As debt investors, we also exercise rights at proxy voting was warranted at this stage. AGM results showed 84% of board’s Audit Committee should comprise directors who the fund level. For example, when our investment teams 03.6 Conflicts of interest shareholders supported the plan, indicating heightened are unquestionably independent and have appropriate deem market conditions to be favourable, they may 03.7 Industry engagement scrutiny of plans more generally. We supported the qualifications, experience, skills and capacity to decide to negotiate covenants in order to secure better and commitments shareholder resolution on lobbying but voted against effectively contribute. We would vote against if this debt holder rights. the capex-related resolution given its overlap with the were not the case. 04 company’s transition plan. Our engagement approach applies to our equity and AllianzGI as a sustainable business Capital-related resolutions fixed income holdings, in so far as the counter parties Shareholder proposal on human rights overlap. We ensure flow of information through our 05 The extensive, cross-border nature of a large US food We continued to vote against large capital issuance investment and collaboration platform, which both Appendix producer and distribution firm’s supply chain heightens authorisations that were not supported by a credible business rationale from management. Only in teams can access. In 2022, we plan to broaden and the risk of human rights issues. We supported a exceptional circumstances will we support an increase systemise the work between the Sustainability and Fixed shareholder proposal calling for the company to report in capital with pre-emption rights of greater than 33% Income teams in several areas. In particular, we will on its due diligence processes to assess, identify, prevent, and an increase in capital without pre-emption rights improve the connection across the teams to include mitigate and remedy actual and potential human rights of greater than 10% – and only when justified by an more fixed income-specific topics and tailor it to the impacts. The resolution failed to gain majority support, 1 requirements of particular fixed income funds, such as but it attracted just under 20% support. We expect the individual company . sustainability labelled debt. company to have taken note of investor concern and We voted against 15% of capital-related proposals will monitor this issue in future engagements. in 2021 (2020: 16%). In many markets, our votes Auditor-related votes against were because companies did not provide pre-emption rights according to our expectations. We expect investee companies to evaluate and retender In Hong Kong, Taiwan and several European markets, audit contracts regularly and to change auditors after such as Germany and Italy, we voted against up to a maximum of 20 years of service unless stricter local 30% of capital-related resolutions. In the US, we voted laws apply. We voted against 26% of proposals to ratify against 60% of such resolutions. A frequent concern the auditor (2020: 25%), in particular where there was was around resolutions to increase authorised common no commitment from the company to retender the stock by over 10%, where these were not undertaken in audit mandate. exceptional circumstances and appropriately justified 1 Note that we apply stricter rules for Germany.