01 03.2 Engagement outcomes by theme continued Principles 7 9 Introduction 02 Sustainable investing on agribusinesses as well as their customers, covering 1. Covid-related risks and implications We engaged with a Spanish utility company on a human 03 investment banks and shareholders. We believe this We continued to assess the implications of the rights controversy to understand the background and Active stewardship multi-pronged effort will achieve the greatest impact. determine whether the company is investable for our 03.1 Our engagement approach pandemic through engagement activities covering In 2021, we engaged twice with a US agriculture multiple industries and countries, thus continuing SRI funds. It was encouraging to see that the company 03.2 Engagement outcomes and food company on its potential supply-chain our engagement focus from 2020. We scrutinised has implemented a thorough mitigation plan and by theme chairpersons on board oversight in times of crisis consulted the affected community, related authorities 03.3 Collaborative engagements deforestation risk, especially soybeans sourced from and NGOs. Later, we observed that the controversy 03.4 E scalation where initial Brazil. We believe the company could gain value and their interaction with management and the from 100% deforestation-free products and urged appropriateness of company’s risk management was downgraded from severe to moderate by our data engagement is not enough systems and any amendments. We put particular provider. We also engaged with the data provider 03.5 I nfluencing companies through it to bring forward its target of achieving assured to be certain that the negative impact of the human proxy voting zero deforestation in its supply chain by 2025. As an focus on employee health and safety and the outcome of our engagements, the company started implications of the pandemic for staff turnover rights controversy had subsided. With this reassurance, 03.6 Conflicts of interest and talent retention. we removed our internal flag. We will follow up with the 03.7 Industry engagement monitoring soybeans indirectly acquired within the company to monitor progress on the investigation and and commitments Brazilian Cerrado. It now monitors 98% of all soy Encouragingly, many companies were well prepared mitigation measures. directly purchased from farms in the region. The to deal with the risks and uncertainties. For example, 04 company also began receiving third-party verification we engaged with a chemical company on board 3. Ensuring employee safety AllianzGI as a sustainable business for its “traceability to farm” scheme, offering another oversight in times of crisis and the appropriateness of We engaged with an Asian construction company 05 layer of assurance to give stakeholders confidence its risk management systems. We learned that there regarding employee safety. From our research, we found Appendix that its zero-deforestation policy is being enforced. has been frequent exchange between the board and that the company is lagging behind peers in adopting Engagement topic: the executive team including daily reports to the board. robust safety programmes with a quantified incident Inclusive capitalism The company reacted quickly worldwide and had only rate target. Given the criticality of employee safety, a few cases among employees working onsite. not least when assessing social risks, we started an There is a growing focus on the concept of “inclusive We expect investee companies not only to address engagement with the company. Its dominant position capitalism” as a more comprehensive approach to the immediate impacts of Covid-19 but to consider in the local market means it has an important potential economic growth to address the many inequalities strengthening risk management for the long term, signalling effect to its peers. that exist and overlap globally. Our engagements taking into account changes in supply chains or ways During the engagement meeting with the deputy under the theme of inclusive capitalism spanned a of working caused by the pandemic. For instance, general manager of the corporate finance department broad range of topics. we engaged with a sports and apparel company which and the Head of ESG, we raised our concerns and In 2021, we engaged companies with a particular continued to suffer disruption to its supply chain in received a commitment to address the issue within focus on how they manage their workforce. Topics Southeast Asia and encouraged it to think about long- the year. In December, we were encouraged to see included health and safety issues and the implications term solutions to strengthen supply-chain resilience. the company publish its sustainability roadmap, with of the pandemic on the workforce, client relationships 2. Engaging on human rights controversies employee safety a key principle. It set an ambitious goal and supply chains. In the case of shareholder proposals, of achieving a work-related injury rate of below six per we also reached out to understand companies’ We expect companies to respect human rights and 1,000 persons by 2025, promised to provide annual views on a specific voting item. We engaged with a make appropriate efforts to ensure there are no safety and health training to 100% of employees by number of companies on controversies, for example human rights violations in their own operations and 2025, and established a mechanism for subcontractor related to workers’ rights and human rights, to seek the wider value chain. We believe human rights are workers to report safety hazards. We will continue our more information on the situation and understand the basis of an inclusive and sustainable society. In engagement to track progress on implementation. the action being taken to remedy it. This also related our SRI strategy, we exclude companies that have to names held in our sustainable funds to confirm faced severe controversies, including convicted whether certain companies were investable or not. human rights violations.