2019 Engagement Report 
 
 
Engaging with issuers on environmental, social and governance (ESG) issues is a vital part of AB’s 
fundamental research. Our analysts collaborate with responsible investment experts to better 
understand the impact of ESG considerations on company performance and—increasingly—to advocate 
for advancements in behavior and business practices. 
Our analysts and portfolio managers share insights using proprietary research and collaboration tools. 
PRISM, a fixed-income credit rating and scoring system, includes ESG scores assigned to each issuer by 
AB analysts that are accessible to investment professionals in real time. Equity analysts use ESIGHT, a 
proprietary ESG research collaboration platform where AB analysts input their ESG assessments and 
results from company engagements, and house third-party research. Analysts also exchange 
perspectives across asset classes to gain a more complete picture of investments. 
ESG considerations have long been integrated in our investment process, because they’re critical to 
making informed risk/return assessments and investment conclusions. The methods of applying ESG 
considerations vary. Some teams directly incorporate ESG concerns into their discount rate; others 
include ESG insights in the information mosaic that shapes investment decisions.  
In 2019, AB’s analysts—often collaborating with our responsible investing specialists—conducted 328 
ESG-focused engagements with issuers. It was a global effort, addressing issues across the ESG 
spectrum: 45% of engagements were on governance, 35% on social issues and 20% on environmental.  
Often, these engagements cover multiple topics. We expect engagement on social and environmental 
issues to increase over time.  
 
The engagement examples in the following pages are intended to be a representative sample of our 
engagements on environmental, social and governance issues with firms in diverse industries and

geographies. Collectively, we believe they provide perspective on how we’re engaging companies on 
ESG issues.  
Environmental Engagement 
 
Reckitt Benckiser (Household Products)  
We had multiple engagements with this UK-based multinational consumer goods company in 2019 on 
the management of its product carbon footprint, climate change risks, greenhouse gas emissions and 
social impact on communities. These issues provide Reckitt Benckiser with opportunities to improve 
operational performance and enhance its position with consumers who are increasingly supporting 
brands with strong environmental focus on sustainable production and packaging. 
The company had set several ambitious environmental goals for 2020 including a 40% reduction in 
greenhouse gas emissions stemming from manufacturing, a 35% reduction in energy consumption and a 
33% reduction in carbon footprint. At the time of our engagement with Reckitt Benckiser in May 2019, 
the company had reduced emissions by 35.2% and energy consumption by 22.6%, but its carbon 
footprint was only 4% smaller. The company had also targeted a transition to 100% renewable energy by 
2030, which is ambitious given that the renewable sourcing for manufacturing sites was 30%. 
 
Reckitt Benckiser uses carbon lifecycle modeling to understand and manage its climate change risks and 
impacts throughout the value chain. To improve its environmental profile and achieve its goals, the 
company is implementing energy-efficient production processes, investing in purchased and on-site 
renewable energy, and advancing its sustainable innovation program.  
 
Despite these efforts, our ongoing engagement with Reckitt Benckiser revealed that the company is not 
adequately focused on executing its environmental strategy, as observed in the underperformance 
towards its own stated 2020 environmental targets. During meetings with company management in the 
third quarter, we re-iterated our view that effectively managing emissions and energy consumption was 
critical to improving operational performance. However, we ultimately concluded that Reckitt Benckiser 
was not fully executing its high-profile environmental initiatives – presenting a potential long-term risk 
to the company’s brand and reputation with consumers.  
 
Although we are continuing to monitor the company’s progress in these areas and plan to continue our 
engagements in 2020, we have lowered our price target due to the lack of tangible focus on the 
environmental risks identified and discussed.     
 
Suzano (Paper Products)  
Brazil-based Suzano is one of the largest paper and eucalyptus pulp producers in the world, with 
businesses including forestry, cellulose, paper, biotechnology, Eucafluff, tissue and lignin. The company 
produces hardwood pulp from eucalyptus and oversees eucalyptus and other planted forests 
surrounding the Amazon.

In the third quarter of 2019, Brazil received intense, negative global press because of large fires in the 
Amazon rainforest, which were widely attributed to deforestation and land clearing for agriculture. 
More frequent fires intensified international concern about the fate of the Amazon rainforest, a critical 
absorber of greenhouse gas that plays a significant role in mitigating global warming. The fires also 
occurred as Brazil undergoes a political shift that reflects weaker environmental regulation and controls.  
AB reached out to Suzano in early August 2019 to better understand the company’s environmental 
position given the significant increase in fires. As the largest forestry company in Brazil, Suzano owns 
significant amounts of land adjacent to the Amazon. 
Suzano told us that it has set aside approximately 40% of its land for forest conservation and is 
protecting more land than mandated by law. It focuses specifically on areas with positive social and 
environmental attributes such as biodiversity, and those that extend well-preserved forest fragments 
and protect rare or threatened ecosystems. 
Suzano also communicated its commitment to the non-commercialization of timber or products 
containing wood fibers from natural forests converted into commercial forests. Suzano’s forest 
restoration program spans three regions: the Amazon, the Atlantic Rainforest and the Cerrado. In 10 
years, Suzano planted more than 11 million native seedlings, contributing to biodiversity. And in 2018, 
the company drew approximately 90% of its energy needs from renewable sources. 
AB encouraged Suzano’s Chief Financial Officer (CFO) to communicate the company’s continued strong 
commitment to environmental and social concerns in the Amazon to the wider market, particularly 
given the negative publicity and intense media scrutiny related to the fires. In August 2019, the company 
issued a press release detailing Suzano’s commitment to sustainable forest practices and the 
preservation of the Amazon. 
In our view, this public statement continued Suzano’s transparency and commitment to embedding ESG 
considerations in its corporate and environmental practices. It also offered a significant counterpoint to 
2019’s Amazon deforestation and land burning, as well as the Brazilian government’s shift toward 
weaker environmental policy. 
AB met with Suzano’s CFO again in September 2019, when he explained that the company was using 
drones to improve its forest fire surveillance, and that it was advocating tougher environmental laws to 
protect the Amazon and reduce illegal wood supply. These practices signal Suzano as an exemplary 
corporate leader in environmental performance and management. 
 
Social Engagement 
 
CBRE (Real Estate Services)  
Based in the United States, CBRE is the largest commercial real estate services and investment firm in 
the world. To provide feedback on how CBRE can improve its sustainability and corporate responsibility 
programs ahead of its next reporting cycle, we spoke with several of its senior leaders, including the 
senior vice president of the corporate responsibility program, the investor relations team, the director

of corporate responsibility and the executive assistant of the Global Assurance & Advisory division. 
Representatives from the company’s sustainability consultant, EY, also attended. 
We believe the firm can improve its human capital development, how it addresses the physical and 
transitional risks associated with climate change, and the connection between sustainability and 
corporate responsibility and the company’s long-term financial performance and viability.  
CBRE has a high turnover rate (22% in 2018). Much of the company’s growth is through M&A, and the 
service orientation of the business is highly customer-facing, so this issue can have a material impact on 
the business. The firm must be able to effectively integrate and maintain talent, a risk it rightly cites in 
its 10-K. CBRE also reports in several places that it’s seeing more growth in contractual revenue versus 
fee revenue, which suggests that long-term relationship development and maintenance between clients 
and employees are imperative. 
The company indicated that it’s well aware of the turnover challenge and continues to put significant 
resources toward addressing it. Management also mentioned that the company measures the cost of 
this turnover as well as the return on investment from employee training and development. It was clear 
to us that the company understood that greater transparency on this topic will enable investors to make 
more informed decisions. Management conveyed that it will review the current level of disclosure. 
We also noted that CBRE received an AFL-CIO shareholder proposal relating to its arbitration on sexual 
harassment. The company’s efforts on additional disclosures on this topic will be essential to us making 
an informed assessment on how we should vote on the proposal in CBRE’s upcoming annual general 
meeting. 
Regarding climate change vulnerability and carbon emissions, CBRE’s sustainability report focuses on 
Scope 1 emissions (direct emissions from owned/controlled sources) and scope 2 emissions (indirect 
emissions from the generation of purchased energy). There’s very little indication of how the firm 
approaches physical resiliency to environmental changes such as more frequent severe weather events 
and rising temperatures, but the company does disclose some information on potential physical risks in 
its CDP reporting. It also acknowledges physical risks (though not those stemming from climate change) 
throughout its discussion of risks in its 10-K.  
About the potential physical impacts of climate change, the company acknowledged that it is 
considering physical risks, and pointed to an example of how it’s managing transitional risk: the 
company has achieved savings by being more energy-efficient, which isn’t currently reported. The team 
also noted that CBRE sees an opportunity to develop and grow its sustainability services. 
We also discussed the company’s Stakeholder Engagement and Materiality Assessment. Although the 
company has a robust qualitative description of its approach to stakeholder engagement, it is our view 
that there’s room for improvement. For example, the company chooses materiality topics instead of 
hearing directly from stakeholders on what’s material to them.  
For clarity, and to ensure the company is measuring and managing what’s important to stakeholders, we 
recommended making engagement more systematic and enabling stakeholders to self-identify material 
items rather than choose from predetermined options. For example, physical risk and transitional risk 
from climate change were not among topics the company presented for stakeholder feedback. The

company also indicated that it was including suppliers in the stakeholder engagement process, although 
it excluded this group from its initial remarks. 
The company is considering our feedback to expand disclosure on the explicit costs and benefits of its 
sustainability and corporate responsibility initiatives, including the opportunities and risks associated 
with climate-related mitigation. It’s also speaking with other shareholders. We’ll continue to monitor 
the company’s materials for updates, and plan to follow up on board oversight as well as expertise in 
talent development and climate science. 
 
WNS Global Services (Data Processing and Outsourced Services) 
We engaged with the management of WNS, a leading global business-process management company, to 
explore how it mitigates the risks of managing a global workforce of 40,000 employees. We also wanted 
to understand WNS’s policies and procedures for using and protecting data on individuals that it 
processes as part of its ongoing business operations. 
WNS’s outsourcing services including finance, accounting, customer relationship management and 
business administration services, and its success has been supported by leveraging lower-cost talent 
globally and its expertise in optimizing processes. Despite increased digitalization, WNS processes are 
still very labor intensive, and its lines of businesses tend to have high natural employee turnover. 
Because WNS’s clients expect service cost to decline yearly, the firm must deliver productivity gains to 
protect profitability. We were curious to learn how WNS balances the need for productivity gains from 
its employees with the pressure to keep costs down and manage naturally high turnover rates.  
 
As part of their regular line-of-business duties, WNS employees gain access to sensitive information on 
company clients. We wanted to better understand what WNS can do with that data, who is ultimately 
responsible for its security, and what processes and policies are in place to ensure data privacy. We 
regularly engage with WNS, holding discussions with senior-level finance executives who oversee 
investor relations.  
 
During a recent conversation, we discussed WNS’s talent management in detail, as well as its data-
protection policies and procedures. We learned that entry-level recruiting and training is crucial for WNS 
to replenish its employee base in a cost-effective manner. The majority of its 40,000 employees are 
front-line employees, mainly recruited as entry-level positions for recent college graduates. WNS has 
very specific hiring criteria, and looks for people that possess the appropriate skill set and that are a 
cultural fit. WNS hires only one out of every 25 candidates it speaks with, and each hire must complete 
firm- and function-specific training, which usually lasts six weeks. 
 
WNS manages natural attrition to control costs while retaining valuable talent. The corporate attrition 
rate is 30%, driven by 60% to 70% attrition in call centers, high-teens attrition in IT and attrition in 
business process outsourcing that’s in line with peers, based on conversations we’ve had with some of 
those companies. We learned that most WNS turnover is through natural attrition—people leaving 
voluntarily—that’s a necessary part of the business model.  
 
WNS manages voluntary turnover through salary and performance reviews. Annual compensation 
increases are based on each person’s ability to be more productive. Entry-level positions are paid in line

with the industry average, and the best performers can expect a 10% to 12% salary increase in the first 
year. The average global wage increase for WNS is about 8%. WNS is using digital tools to help make 
employees more productive, and it’s investing in training programs to help promising entry-level talent 
develop into middle management. Currently, half of the company’s middle management rose from 
entry-level positions at the firm. 
 
WNS has increased its focus on recruiting and advancing women globally through targeted recruitment 
campaigns. The company has also worked to overcome cultural biases about women in the workforce. 
As a result, WNS has seen a 41% increase in women hired over the past three years. In 2015, women 
represented 36% of WNS employees. That percentage had risen to 45% at the end of 2018. 
 
In terms of data protection, we believe that WNS has low data-breach risk, because it’s never in control 
of clients’ data. The data WNS processes isn’t stored on WNS systems; clients provide remote access to 
it. WNS’s main data-protection vulnerability is its human workforce, and the company has taken several 
measures to mitigate this risk. WNS has processes to limit the sensitive information one employee can 
access. The firm invests in software to help identify potential data abuse by employees. To date, WNS 
has avoided material data breaches. In some cases, employees have abused their access to data, but 
WNS identified and fixed the problem in a timely manner.  
 
Our discussion of talent management highlighted that WNS is aligned with industry best practices. Its 
ability to manage a complex talent pool in a high-attrition industry increased our conviction that WNS 
can continue to grow while maintaining its level of service and profitability. We encouraged 
management to publish a recurring sustainability report including workforce metrics, so we can 
continue tracking the company’s performance in managing talent development, attrition and diversity. 
In terms of data privacy, we were convinced that WNS is investing in appropriate tools to mitigate risks.  
 
 
Governance Engagement 
 
Commvault Systems Inc. (Systems Software) 
Commvault Systems is a provider of data management software applications and related services. Elliot 
Management, an activist fund, increased its ownership stake in Commvault Systems, Inc. to 10.3% in 
April 2018, which appears to have been a driver of Commvault’s recent implementation of changes to 
both its board of directors and compensation program. AB engaged with Commvault at that time to 
assess the alignment of executive compensation, board refreshment and succession planning with 
shareholders’ interests over the long run. 
In August 2019, AB held a call with Commvault’s Head of Human Resources Operations, an Investor 
Relations manager and a member of the compensation committee to review the four new directors who 
joined the board. This board shift appears to be a classic arrangement with Elliot, with Commvault 
meeting its demand to prevent a potential proxy contest, particularly with the market reacting positively 
to Elliot’s increased stake.  
In terms of compensation, AB was more concerned about the former CEO’s pay, because the company 
modified its agreement with him on his retirement. Specifically, his stock options would be allowed to

continue vesting—even the performance-based portion. The company also extended the timeframe 
during which the options will be exercisable to 10 years, versus 30 days after his last employment date.  
These amendments effectively lead to Commvault paying two CEOs, which does fall short of market best 
practices. The pay structure for the current CEO also lacks certain structural aspects, as long-term 
incentives were based solely on three-year relative total shareholder return (TSR), with no absolute cap 
for negative TSR years. Short-term incentives also lack clarity in terms of threshold, target and maximum 
disclosure.   
Commvault explained that the adjustments to the prior CEO’s severance pay was to account for his help 
with an orderly transition for the new CEO. The outgoing CEO had served since 1998, so a traditional 
severance package would be substantial. A less expensive option was to take a USD $12 million non-cash 
charge by making several amendments to the severance pay, structuring the package as if he were still 
with the firm. Commvault responded positively to AB’s comments to incorporate a per-share basis 
metric into its current CEO’s pay structure and added that they would review internally.  
The meeting clearly answered our questions on the context of board changes and pay structure for the 
retired CEO, addressing concerns that would have led to negative votes on the compensation committee 
chair and the say-on-pay proposal. At the 2019 annual general meeting, AB supported all director 
nominees and the compensation program based on the additional information we obtained. We plan to 
follow up in 2020 to discuss Commvault’s overall board and executive succession plan, and to determine 
whether the firm has made any improvements to its compensation program for the current CEO. 
 
Charles Schwab (Investment Banking & Brokerage)  
Historically, we’ve engaged with the management of Charles Schwab, a US based bank and stock 
brokerage firm, because we were concerned that the structure and policies of its board of directors 
posed risks. The Schwab board did not have a mandatory retirement age for directors; at the time, five 
board members were over 75 years old with an average company tenure of 26 years. 
Schwab had been an excellent performer both fundamentally and in the market, but we were concerned 
that this governance structure could lead to problems in the future. We raised this issue and expressed 
our concern with the company’s CEO and CFO, who were in fact wrestling with the same issue. Our 
support and thoughts helped prompt management to refresh the board. 
More recently, we engaged with Schwab management in May 2019 to discuss the defeat of a 
shareholder proposal to disclose equal employment opportunity data. We believe that interest in the 
disclosure of this type of information is increasing, so we wanted to better understand management’s 
reluctance to implementing this shareholder suggestion.  
As management explained, its concerns relate mostly to data relevance. However, the company hired a 
head of Diversity & Inclusion in 2018 who has been studying the issue. While Schwab management is 
confident that there is no gender pay gap issue, the proportion of diverse hires for its financial 
consultant role has not met the company’s target, nor is it representative of Schwab’s customer base. 
We believe that management must continue to work on this issue.

We also spoke with management about the company’s board, which remains entrenched, with mostly 
older individuals despite three retirements in the past two years. Given that the company has three 
older board members whose terms will expire in 2020, we emphasized to management that it should 
continue to refresh the board. However, management pushed back, suggesting that some level of 
continuity added value. In our view, management was noncommittal in terms of how many of the three 
members with expiring terms would not stand for reelection.   
Finally, we raised the issue of Schwab’s universally poor environmental, social and governance scores 
among third party ESG rating providers. The CFO strenuously objected to these assessments, as he and 
other members of management view Schwab as having a mission-driven culture that has decreased the 
cost of investing and increased investing knowledge for millions of customers. While the scores are low, 
we believe Schwab is well positioned in environmental and social but has more work to do on 
governance. We encouraged management to engage with ESG ratings firms and disclose more 
information that will hopefully result in ratings that more accurately reflect management’s practices. 
The CFO was open to this suggestion, and shared that the issue was discussed at the most recent board 
meeting.