01 03.4 Escalation where initial engagement is not enough Principles 7 11 Introduction 02 Sustainable investing In our engagements, companies are not always • Co-filing/filing resolutions at shareholder meetings. 3. A ddressing the violation of workers’ rights to 03 responsive to our concerns or their actions do not freedom of association Active stewardship give due consideration to the interests of minority • Reducing or exiting our investment position when 03.1 Our engagement approach shareholders. If we conclude that our concerns cannot appropriate (any decision to exit an investment We expect our investee companies to respect and 03.2 Engagement outcomes be resolved through standard interactions with investee position is taken at a portfolio level). ensure labour rights for their own employees and by theme companies, we may start a more focused engagement workers across their supply chain. We reached out to an We consider making public statements in respect of apparel company with respect to an alleged accusation 03.3 Collaborative engagements and consider escalation to achieve our engagement individual companies as a last resort when all other of anti-union behaviour at one of its international plants. 03.4 Escalation where initial objectives. The chosen engagement approach will channels of constructive dialogue have been exhausted. If confirmed, the company would have been acting in engagement is not enough depend on the circumstances and the nature of our violation of its social responsibilities as an employer 03.5 Influencing companies through concerns. Escalation options are not mutually exclusive 1. I nfluencing the takeover of an Irish under the OECD Guidelines for Multinational Enterprise proxy voting and can be combined depending on the situation. healthcare company 03.6 Conflicts of interest During the takeover of the company, we pursued and would be in conflict with our expectations. We had 03.7 Industry engagement Engagement is typically escalated through additional various escalation strategies which resulted in an recorded several unsuccessful attempts to engage with and commitments meetings with management and more intensive improved final bid. Following an initial offer which this company on governance topics in the past. In our dialogue with non-executive directors or with the we considered too low and limited engagement by letter to the company, we presented our viewpoint and 04 chairperson. We prefer to address issues directly with the company, we issued a press release highlighting gave them the opportunity to respond to the allegation. AllianzGI as a sustainable business a non-executive board chairperson, lead or senior The company declined to engage openly with us and independent director, or other non-executive board our concerns. Other key shareholders subsequently only provided an extract of their public statements. This 05 members – thereby gaining senior input on the matters did the same. To inform our strategy, we had follow- failed engagement is further evidence of the company’s Appendix of concern. We also consider emphasising our position up discussions with the board in consultation with poor governance and testifies to its unwillingness to to the board in writing if we have the impression that external legal counsel, other institutional investors and consider minority shareholders’ concerns. At the end direct interaction has been unsuccessful. activists. We also held discussions with the acquirer’s of 2021, we followed up with the company to request advisers to negotiate a more acceptable price. After next steps but did not receive a response. We will now We prefer to engage directly with companies but, a lengthy iterative process, we were able to provide consider further escalation measures. where direct engagement does not progress satisfactorily a “letter of intent” and a public statement of support or where our shareholding is insufficient for an effective for the improved offer. Crucially, as the largest escalation in our own right, we consider other options. shareholder, we were able to achieve a 5.6% uplift These may include: on a recommended bid to the benefit of our clients. • Voting against resolutions at shareholder meetings. 2. T argeting improved cybersecurity with a German • Collaborating with other institutional investors on media company single issues. During our regular engagement in 2020, we discussed the company’s policies and governance on • Joining collaborative engagement initiatives cybersecurity, which we consider to be a material risk co-ordinated by investors, trade associations and for the company. We resolved that the company’s IT other organisations where these seek to address security and data protection framework was insufficient, market or industry-wide concerns. addressed our concern with the management board • Expressing concerns through advisers to the and requested a follow-up. The chief operating officer company, for example in merger and acquisition laid out the strategic programme that the company has (M&A) situations. embarked on to address the highlighted issues. We will continue to monitor its progress going forward.