2 0 1 8 — 2 0 1 9
A N N UA L
R E P O R T
F O R  U S E  B Y  I N S T I T U T I O N A L  I N V E S T O R S  O N L Y.  N O T  F O R  U S E  W I T H  T H E  G E N E R A L  P U B L I C .

Stock Examples – Companies referred to in this report have been chosen for illustrative purposes only to demonstrate our 
ESG Investment process and are not intended to be an indication of performance. This information should not be considered 
a recommendation to buy or sell any particular security. There is no assurance that any securities discussed herein will feature 
in any future strategy run by us. Any examples discussed are provided purely to help illustrate our investment style or, are 
given in the context of the theme being explored. The securities discussed do not represent an entire portfolio and in the 
aggregate may represent only a small percentage of a strategy’s holdings.
To help us continually improve our service and in the interest of security, we may monitor and/or record telephone calls.
2
ANNUAL ESG REPORT 2018—2019

“Our goal, in the pages 
that follow, has been to 
evidence the work that we 
do and demonstrate our 
commitment through our 
consistent and carefully 
considered approach.”
C
onsideration of a company’s 
Environmental, Social and 
Governance (ESG) factors is integral 
to our long-term investment approach. 
The investment implications that ﬂ ow 
from ESG opportunities and challenges 
are as numerous as they are varied. This 
inaugural annual report reﬂ ects our 
ambition to share our thinking, and our 
work, around ESG matters, where the pace 
of evolution is perhaps only surpassed 
by growing importance. Our goal, in the 
pages that follow, has been to evidence 
the work that we do and demonstrate our 
commitment through our consistent and 
carefully considered approach. 
Engaging with companies is central to 
our investment process. Through our 
conversations with some of the world’s 
leading corporations we recognise the 
challenges they face in pursuing change, as 
well as documenting it. And through our 
research, and the discussion amongst the 
team that is so central to our approach, we 
constantly strive to assess all the attributes 
that make a company a good investment, or 
not. Where should a company be applauded 
for its eff orts across E, S and G and where 
is improvement required? How do we verify 
ESG corporate reporting and how do we 
compare the multitude of metrics applied 
in that reporting? 
These are all frequent topics of discussion 
– and often spirited debate! – and we are 
always happy to share those conversations. 
This is an area where there are few deﬁ nitive 
answers and constant change. Engagement 
and conversation beneﬁ ts us all.
O U R  C O M M I T M E N T
Jane Henderson, Managing Director
Best wishes,
3
ANNUAL ESG REPORT 2018—2019

4
ANNUAL ESG REPORT 2018—2019

6 . 	
A B O U T  U S
	
7 . 	
O U R  A P P R O A C H
	
1 0 . 	
F R O M  T H E  
R E S E A R C H  T E A M
	
The team share observations on different 
areas of their research and engagement 
over the year
	
2 2 . 	
E N G A G E M E N T
	
Notes from selected engagements  
over the past 12 months
	
2 7 . 	
P R O X Y  V O T I N G
	
Quarterly summary of activity and  
voting decisions
	
3 2 . 	
C O L L A B O R A T I O N
	
3 3 . 	
W E  E X P E C T  N O  
L E S S  O F  O U R S E LV E S
	
3 4 . 	
F U R T H E R  R E A D I N G
C O N T E N T S
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ANNUAL ESG REPORT 2018—2019

R E S P O N S I B L E
W
e are entrusted to invest on behalf 
of our clients around the world 
over a long-term investment horizon. In 
that context, it is inconceivable that we 
would not invest in a responsible way. 
We look for companies that meet our 
deﬁ ned investment criteria. This places as 
much importance on management talent, 
operational effi  ciency, rigour and best 
practice, governance and culture as it does 
ﬁ nancial metrics. 
I N T E G R A T E D
Every member of the Research team 
is responsible for understanding how 
companies’ sustainability credentials 
stack up. There is no separate ESG 
team. This is deliberate. These factors 
are too important. They are integral 
to our investment analysis and 
decision-making, not an adjunct.
C O N S I D E R E D
With a long-term investment horizon 
and a highly considered, and reﬂ ective, 
investment process, we take time to 
consider every company on its merits. 
We don’t apply broad brush rules or 
impose a myriad of exclusions. Instead, 
we collectively consider the context and 
make informed, and collective, judgements.
I N Q U I S I T I V E
Our research is multi-faceted. From 
desk-based research to engagement 
with management, visits to factories or 
shops, discussions with, and analysis of, 
suppliers or competitors, we must build a 
comprehensive picture of any company, 
and then challenge it. 
E N G A G E D
Engagement is what we do every day. It 
might have a speciﬁ c goal, but equally there 
need not be a discrete objective. 
We expect every company we invest in 
to engage on issues of sustainability. We 
focus on getting to know and understand 
every business and its industry in order 
to seek out the issues that matter most for 
the sustainability of those businesses and 
those industries. If a business is not well 
positioned, with our long-term investment 
horizon, it is un-investable. In this way, we 
take a bespoke approach for each company 
and industry in order to focus on the issues 
that matter most. We avoid box ticking.
A B O U T  U S
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ANNUAL ESG REPORT 2018—2019

I N T E G R A T E D  A N D 
I N T E G R A L
C
onsideration of the ESG opportunities 
and challenges relevant and material to 
any investment company must be integral 
to our research. 
This is based on the straightforward 
and simple premise that only by striving 
towards appropriate standards of corporate 
governance, respect for the environment 
and respect for all stakeholders embedded 
in a company’s culture as well as its 
operations, will a company prosper over 
the long term. 
ESG considerations can never be an aside 
to any investment discussion. Because of 
this, we do not delegate responsibility and 
oversight to a separate team. ESG issues 
are the responsibility of each member of 
our Research team. 
With our focus on ‘bottom-up’ investment, 
our investment process is deliberately 
structured to discard companies where 
ethical, governance, environmental or 
social standards are deemed to put the 
achievement of the long-term portfolio 
return targets at risk. 
In researching any company, regardless 
of geography or sector, we apply the same 
analytical framework. That framework 
forms an important part of the overall 
research process and is based on seven 
areas of investigation. 
1 — Company
2 — Control of Destiny
3 — Integrity 
4 — Characteristics
5 — Financial Proﬁ le 
6 — Management & Board
7 — Valuation/Trading
It may be appropriate to consider 
ESG factors across almost any aspect of 
a company’s business and therefore all 
seven areas. 
O U R  A P P R O A C H
“ESG considerations can 
never be an aside to any 
investment discussion. 
Because of this, ESG issues 
are the responsibility 
of each member of our 
Research team.”
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ANNUAL ESG REPORT 2018—2019

R E S E A R C H
R E S E A R C H
T E A M 
D I S C U S S I O N
T E A M 
D I S C U S S I O N
M O N I T O R
S T O P
I D E A S
T E A M 
D I S C U S S I O N
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
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ANNUAL ESG REPORT 2018—2019

I N V E S T
R E S E A R C H
R E S E A R C H
R E - P R E S E N T  T O 
E N T I R E  T E A M
P R E S E N T  T O 
E N T I R E  T E A M
P R E S E N T  T O 
E X E C U T I V E
M O N I T O R
S T O P
T H E 
I N V E S T M E N T 
P R O C E S S
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
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ANNUAL ESG REPORT 2018—2019

R E S E A R C H
R E S E A R C H
T E A M 
D I S C U S S I O N
T E A M 
D I S C U S S I O N
M O N I T O R
S T O P
I D E A S
T E A M 
D I S C U S S I O N
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
*This is not an exhaustive list of our ESG questions and considerations but all are amongst the areas 
frequently discussed and researched and are intended to demonstrate the breadth of our approach.
D I S C U S S I O N
We’ve heard the case for growth, but 
what are the risks to that case?
Are there identiﬁ ed weaknesses across 
E, S or G that might derail that growth?
What are the company’s ESG priorities?
What is the day-to-day inﬂ uence of the 
founder/majority shareholder?
Has the company been forthcoming 
in providing information?
Can we meet the CEO?
I D E A S
Does the company operate in any area 
where environmental and/or social 
impacts are often negative?
Is there evidence of a healthy, 
supportive corporate culture that will 
sustain long-term growth?
Is there evidence of strong employee 
retention?
Is there evidence of robust supply 
chain transparency, oversight and 
partnership?
Are there any ESG practices that create 
enduring competitive advantage?
Are there any particular environmental 
challenges?
Is the company well-positioned to 
improve its environmental footprint 
and/or address any regulatory change?
Is there anything unusual in the 
ownership or governance structure?
Past scandal or controversy?
Are the company’s accounts qualiﬁ ed 
in any way?
E S G  Q U E S T I O N S  & 
C O N S I D E R A T I O N S*
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ANNUAL ESG REPORT 2018—2019

I N V E S T
R E S E A R C H
R E S E A R C H
R E - P R E S E N T  T O 
E N T I R E  T E A M
P R E S E N T  T O 
E N T I R E  T E A M
P R E S E N T  T O 
E X E C U T I V E
M O N I T O R
S T O P
T H E 
I N V E S T M E N T 
P R O C E S S
PROCEED
PROCEED
PROCEED
PROCEED
PROCEED
R E S E A R C H
What are the standout strengths, 
anomalies or oddities in the 
ﬁ nancial reports and accompanying  
sustainability reporting?
Is there anything of note from a review 
of qualiﬁ cations and experience across 
the management team and board?
Cross reference with Sustainalytics 
controversies report, ISS voting reports 
and MSCI ESG research ratings? 
Membership of relevant ESG indices? 
Commitment to UN SDGs and/or any 
other social or environmental industry 
code or body?
How do environmental metrics 
compare with a relevant peer group?
How does the company approach 
supplier relations? Is the company a 
signatory to any industry agreement on 
appropriate sourcing or human rights 
protection? Does the company have 
its own agreements with suppliers to 
ensure proper oversight and underpin 
effective monitoring?
Review of critical events for the 
company, and its industry – how did 
the company respond to those key 
events or incidents?
Are the company’s stated sustainability 
goals or targets credible and 
ambitious?
P R E S E N T A T I O N
Does this company have the strength 
of management, culture and 
operational standards to succeed 
over the long term, and the ﬁ nancial 
security to protect and advance all 
those criteria?
Are we conﬁ dent that the long-term 
interests of shareholders are aligned 
with those of management?
Are there any challenges within 
the business in its environmental 
output or social standards, or within 
its governance?
Do we believe the company has the 
commitment, knowledge and people 
to strive and to improve?
Do we have sufﬁ cient trust and 
conﬁ dence in the long-term 
sustainability of this business to 
invest today?
11
ANNUAL ESG REPORT 2018—2019

W
ith an integrated approach to ESG, 
every member of the Research team 
is responsible for incorporating ESG factors 
into their analysis, be that in building an 
investment case for a potential new idea or 
in ongoing monitoring and stress-testing of 
current investments. Here, team members 
share thoughts on particular meetings, 
events or research projects over the past 
year that stand out to them, be that as 
examples of good or questionable practices.
E
S
G
A S C E N D A S  R E I T  — 
T H E  R E A L  D E A L
Fraser Fox
Ascendas REIT 
(A-REIT) is 
Singapore’s ﬁ rst 
and largest listed 
business and 
industrial Real Estate Investment Trust. It 
owns a portfolio of high quality properties 
and has a well-diversiﬁ ed roster of tenants, 
focused on high-value added areas 
including technology, scientiﬁ c research, 
and logistics. The trust listed in 2002 and 
in our opinion has a strong track record 
both in terms of ﬁ nancial performance 
and governance. 
I began researching the company in early 
2019. I was already familiar with the 
economic and regulatory landscape in 
Singapore but investigating a REIT raised 
a whole new set of questions to explore on 
top of our usual research process.
REITs have somewhat unusual structures 
and A-REIT is no exception. It has a 
sponsor, Ascendas-Singbridge, a REIT 
manager and property manager (both 
wholly-owned subsidiaries of the sponsor) 
and an independent trustee to protect the 
interests of minority unitholders. Temasek, 
the Singaporean sovereign wealth fund, 
ultimately sits at the top of the structure. 
To further complicate matters, as my 
research continued, Ascendas-Singbridge 
was acquired by CapitaLand (with 
Temasek remaining the largest shareholder 
of the combined entity).
F R O M  T H E 
R E S E A R C H  T E A M
“We had to be confident that 
structures were in place to 
prevent minority unitholders 
from being disadvantaged.”
12
ANNUAL ESG REPORT 2018—2019

I knew that the team would need to 
become comfortable with the trust’s 
governance structures and the interplay 
between the various entities. The support 
of a strong sponsor like Ascendas-
Singbridge/CapitaLand can be hugely 
beneﬁ cial for a REIT but we had to be 
conﬁ dent that structures were in place 
to prevent minority unitholders from 
being disadvantaged, particularly when 
assets were being sold by the sponsor 
into the trust. This is normal practice 
in this arena but it is not without 
potential pitfalls. 
The REIT sector is regulated by the 
Monetary Authority of Singapore 
(MAS), which I have developed a good 
understanding of having spent a lot of 
time researching Singaporean banks over 
the years. That provided a reassuring 
starting point from which to assess 
governance.
On each of the areas I investigated – the 
terms of the trust deed, AGM rules, board 
quality and independence, manager 
performance fee structures, requirements 
for independent valuations and minority 
votes on signiﬁ cant related party 
transactions – I was satisﬁ ed the interests 
of minority unitholders are aligned 
with those of the sponsor and manager. 
Despite its apparent complexity, A-REIT 
has a robust governance structure, falls 
under the remit of a respected regulator 
and beneﬁ ts from the ‘halo eff ect’ of its 
relationship with Temasek.
E
S
G
D & L  I N D U S T R I E S  – 
U N D E R S T A N D I N G 
A  C O N T R O V E R S I A L 
I N G R E D I E N T 
Matthew Gerlach
D&L Industries 
is a leading 
manufacturer of 
food ingredients 
and chemicals in 
the Philippines. The company supplies 
multinational companies as well as local 
companies which gives it exposure to 
meaningful growth domestically and 
fast-growing consumption patterns 
across South-East Asia.
We have speciﬁ cally engaged with the 
company on a number of occasions on 
the subject of its supply practices. The 
company’s second largest raw material 
is palm oil, the most widely used 
multipurpose oil but where production 
has led to extensive deforestation. As part 
of our due diligence, this was clearly an 
important issue for us to consider, and 
one that merited speciﬁ c conversations 
and investigation. 
Over the past three years we have held 
seven meetings with the company and 
travelled to its headquarters in the 
Philippines to meet with the CEO, 
Alvin Lao.
13
ANNUAL ESG REPORT 2018—2019

As well as being a signee of the RSPO 
(Roundtable for Sustainable Palm Oil), 
Lao explained that the company intends to 
have full traceability and sustainability of 
supply and suppliers by the end of 2019. 
The company appears on track to meet that 
goal whilst it has also developed a number 
of ingredients to transition customers to 
zero palm oil if they choose, an eff ort that 
it has expanded to its packaging businesses 
with the use of biodegradable plastic. 
Additionally, the company counts many 
large multinationals, including Unilever 
and Nestlé, among its customers. In 
assessing D&L, seeing these company 
names on its client list gave us an additional 
level of conﬁ dence because having also 
analysed these companies we know that 
they have stringent requirements when it 
comes to ensuring the integrity of their own 
supply chains.
All these points were critical in convincing 
my colleagues as to the sustainability of 
long-term growth for this business as well 
as ensuring suffi  cient understanding of 
the environmental and reputational risks 
associated with palm oil.
Of course, there is room for improvement. 
The Philippines is signiﬁ cantly behind 
the developed world in its adoption of 
stricter environmental standards, so 
management’s proactiveness on these issues 
is well received. Some of the company’s 
smaller local customers may not have the 
ﬁ nancial depth to aff ord fully certiﬁ ed 
palm oil and D&L’s internal eff orts are 
one way to address this. We enjoy a strong 
and open dialogue with D&L. Through 
understanding the company’s commitment 
ﬁ rst-hand we have gained conﬁ dence in the 
company’s approach to this controversial 
ingredient and to environmental damage. 
E
S
G
I N T U I T I V E  S U R G I C A L 
–  M O R E  T H A N  J U S T 
I N T U I T I O N
Alex Torrens
Our research 
on Intuitive Surgical 
underlines the 
value we attach to our 
own proprietary 
research. It demonstrates our willingness to 
back our own research over third party 
ratings. Contrary to a number 
of rating agencies, we are assured of 
Intuitive’s positive social contribution 
and through our ongoing engagement, 
we are equally assured of the company’s 
commitment to improve upon its ESG 
standards, and reporting.
Based in California, Intuitive Surgical 
Inc is a global leader in robot-assisted 
minimally invasive surgery (MIS). Roughly 
one third of its revenues comes from the 
“As well as being a signee of the RSPO (Roundtable for Sustainable Palm 
Oil), Lao explained that the company intends to have full traceability 
and sustainability of supply and suppliers by the end of 2019.”
14
ANNUAL ESG REPORT 2018—2019

sale of robotic systems with the remainder 
from recurring sales of instruments and 
accessories, and service contracts. 
To date, Intuitive’s products have been used 
in around six million surgical procedures. 
There is now compelling evidence that 
the clinical outcomes are superior to 
traditional surgery, cutting recovery times 
for operations from weeks to a matter of 
days, and reducing re-admission rates. 
Patients, as well as hospitals, beneﬁ t 
from fewer days in hospital following a 
surgical procedure. Yet, in our opinion, 
the company has been misrepresented 
and misunderstood by mainstream media 
and some quarters of the investment 
community. In 2013, it fell victim to short-
sellers when Citron Research published 
a damaging report about the company 
entitled ‘Angel with Broken Wings’.
Intuitive had been under the Research 
team’s watch for several years. We saw 
Intuitive as a world-class company with a 
great technology off ering, a strong balance 
sheet and delivering real beneﬁ ts to 
patients, surgeons and hospitals. 
In 2013 the Citron report was one of a 
conﬂ uence of factors that drove the share 
price down by a third and prompted us 
to revisit our research. Throughout our 
initial research and in ongoing work we had 
found the company to be responsive and 
engaged, and at this juncture, the company 
continued to be open and transparent, 
reassuringly so.
One of Citron’s claims was that 
complaints about Intuitive’ s procedures 
were increasing. Intuitive did not hide, 
were happy to engage and countered 
those claims with compelling evidence 
to the contrary.
More recently MSCI awarded the company 
its lowest possible sustainability rating and 
again we re-assessed our own research and 
engaged extensively with the company on 
particular points. Whilst we were conﬁ dent 
in our research and our conclusions, which 
were very much at odds with MSCI’s ESG 
rating, it was important for us to hear the 
company’s case.
Since then, we have continued to engage 
with the company and we have made a 
number of suggestions on how they might 
improve ESG reporting in particular. 
Those suggestions have sometimes been 
unsolicited and on other occasions have 
followed a speciﬁ c request from the 
company’s investor relations team. All 
this has added to our conviction in our 
own research on the company, whilst also 
helping the company improve its ongoing 
reporting, moving away from a simply 
reactive stance. 
Intuitive’s procedures have continued 
to grow year-over-year. For us, that is a 
reliable and trustworthy indicator that 
“We have continued to engage 
with the company and we have 
made a number of suggestions 
on how they might improve ESG 
reporting in particular.”
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ANNUAL ESG REPORT 2018—2019

patients, surgeons and hospitals agree 
with our view of the company and ﬁ nd real 
value in what the company does every day. 
E
S
G
K A O  –  I N N O VA T I V E 
E N V I R O N M E N T A L 
R E S P O N S I B I L I T Y
Alan Edington
KAO is a Japanese 
consumer goods 
company off ering 
products including 
detergents, cosmetics 
and shampoos. KAO also has a chemicals 
arm that gives the company the advantage 
of using its own innovations to 
diff erentiate its products. It has 
established a market-leading position 
in part by demonstrating a clear 
understanding of its wider responsibilities 
to society.
Being vertically integrated enables KAO to 
apply R&D discoveries across its product 
lines. This includes a commitment to ﬁ nd 
more sustainable products and reduce the 
environmental impact of its activities. 
The company’s approach to sustainability 
reaches all through the business. By way 
of a simple example, through changing 
product packaging and adjusting the 
way it packs its trucks, the company has 
materially reduced the number of trips it 
has to make to deliver the same volume 
of goods, reducing emissions and making 
associated cost savings. For some time 
Kao has also been actively investing in 
the search for sustainable alternatives to 
palm oil, with work going into algae as a 
substitute in detergents and shampoos. 
Another important and unique innovation 
has been the development of a new 
dispenser container. Dispenser containers 
for shampoos often have a complicated 
structure that use multiple types of plastic, 
one plastic for the bottle and another for 
the spout from which to dispense the liquid. 
The component parts have to be recycled 
separately and in some cases, the spout 
cannot be recycled. 
KAO has developed a form of dispenser 
using only one type of recyclable plastic, 
making the job of recycling much easier. 
The dispenser is also diff erent in its 
structure. It comprises two ﬁ lm sachets 
that sit one inside the other separated by a 
layer of air, which maintains the integrity 
of the structure and ensures it remains 
upright. These bottles use one tenth of the 
normal volume of plastic and are a genuine 
innovation with strong customer appeal. 
Through a culture of innovation and 
investment in R&D, KAO has become 
highly diff erentiated from its rivals, 
“Kao has also been actively 
investing in the search for 
sustainable alternatives to 
palm oil, with work going into 
algae as a substitute in detergents 
and shampoos.”
16
ANNUAL ESG REPORT 2018—2019

thereby preserving proﬁ t margins. 
The company’s success dates back to 
its foundation in 1887. Today, its products 
appeal to a new generation of consumers 
demanding sustainable products that are 
created, produced and distributed in a 
responsible manner. 
E
S
G
T J X  –  E N S U R I N G 
S U S T A I N A B L E  S U P P L Y
Paul Loudon
TJX is one of the 
largest apparel 
retailers in the world. 
Its business model is 
built on procuring 
excess inventory from more than 20,000 
vendors across the world, and delivering 
that to its 4,300+ stores in a ﬂ exible, 
dynamic and timely manner. 
As a sustainable, global apparel company 
with a signiﬁ cant proportion of its products 
sourced from emerging markets, the 
company appreciates just how important it 
is to assess the integrity of its supply chain. 
In order to do so it calls upon each of its 
21,000+ vendors to sign a comprehensive 
Vendor Code of Conduct and it regularly 
audits the vendors to ensure compliance. 
TJX sees the long-term value of having a 
robust approach to sustainability. Or put 
another way, the company understands the 
reputational damage that can come from 
not having a clear policy and thorough 
processes. Of course, we must trust 
management, but we don’t just take any 
management team at its word or merely 
accept a glossy ESG brochure full of 
aspirational commitments.
As part of ongoing due diligence and 
research on TJX, I visited the factory 
of a direct supplier to the company in 
Guangzhou where some of the company’s 
exclusive merchandise is produced. This 
was an opportunity to assess ﬁ rst-hand 
how conditions are in the TJX supply 
chain. I was introduced to a number of 
“We must trust management, but we don’t 
just take any management team at its word 
or merely accept a glossy ESG brochure full 
of aspirational commitments.”
17
ANNUAL ESG REPORT 2018—2019

employees on the factory ﬂ oor and so far as 
possible, gained a direct perspective of how 
the vendor operates and how it treats and 
retains its staff . Encouragingly the factory 
was impressive, the working conditions 
were excellent, and the employee feedback 
seemed positive. 
We have a very strong and regular dialogue 
with the company. We have met the CEO 
and CFO on dozens of occasions, both at 
the company headquarters outside Boston 
and in Edinburgh. This long-standing 
history of engagement ensures the key 
messages are consistent, and that we can 
hold the company to account regarding 
sustainability commitments. 
E
S
G
W H I T B R E A D  — 
P U S H I N G  F O R  C H A N G E 
Alan Lander
When Whitbread 
announced the 
spin-off  of its Costa 
Coff ee arm in April 
2018 our message 
to the board was clear; we failed to see the 
value that management claimed would be 
realised. Whilst not entirely convinced by 
the case for the demerger, we felt a trade 
sale might get closer to a more appropriate 
arrangement, and price.
Attached to those initial plans were 
proposed changes to management 
remuneration that we also felt were 
inappropriate. Again, we communicated 
our concerns and the productive dialogue 
that followed further demonstrated the 
value in direct and ongoing engagement.
The management team’s revised 
remuneration plan included a long-term 
incentive plan (LTIP) structure, where 
half of the pay-out was based purely on 
execution milestones related to the spin-off , 
whether it created value or not. We felt 
this was excessive and suggested that 
they re-jigged the pay plan so that it 
demonstrated better alignment 
with stakeholders.
Our relationship with the board of 
Whitbread and in particular the 
chairman, Adam Crozier, has always been 
a constructive one. We have established 
regular dialogue with the company over the 
years and on several occasions management 
“We communicated our concerns 
and the productive dialogue that 
followed further demonstrated 
the value in direct and ongoing 
engagement.”
18
ANNUAL ESG REPORT 2018—2019

have expressed their thanks to us for our 
thoughts and feedback. Placing value in 
our long-term strategic approach our views 
are listened to. In fact, during the events of 
2018 they saw us as a very good antidote to 
the activist shareholder group led by Elliott 
Capital Advisors that had pushed for the 
original demerger.
The company’s remuneration committee 
returned with a revised plan which better 
aligned the interests of shareholders with 
those of the company’s management team. 
Under the new compensation structure, 
part of the LTIP was now based on the 
company’s total shareholder return (TSR) 
in relation to a basket of listed leisure and 
retail companies.
As events unfolded it transpired that this 
new arrangement was one that beneﬁ ted 
both management and stakeholders. The 
announcement of the proposed spin-off  
brought interested bidders to the table and 
four months later the business was sold 
to Coca-Cola for £3.9bn in cash, a higher 
price than we had anticipated. 
Our approach to engagement is 
almost always direct and almost always 
done without fanfare. In this case our 
approach worked.
“The announcement of the proposed spin-off brought 
interested bidders to the table and four months later 
the business was sold to Coca-Cola for £3.9bn in 
cash, a higher price than we had anticipated.”
19
ANNUAL ESG REPORT 2018—2019

702 conversations (1 July 2018 – 30 June 2019)
C O M PA N Y  M E E T I N G S*
159
35
150
20
ANNUAL ESG REPORT 2018—2019

262
96
 Chief Executive Ofﬁ cer  
 Chairman/Board member  
 Chief Financial Ofﬁ cer  
 CPO, COO  
 Investor Relations
*702 conversations were had across meetings in Edinburgh, on research trips and on calls.
21
ANNUAL ESG REPORT 2018—2019

E
ngagement with companies is something 
in which we place great value. It is a 
critical part of our company research.
Before making any investment, we must 
be convinced of the merits of the company 
in question. That demands robust research. 
It also beneﬁ ts from dialogue with 
management. 
We must listen to management, probe 
and then reach our own judgement. 
Engagement, to us, is not just accepting well-
rehearsed corporate messages but quizzing 
management to understand the particular 
strengths and vulnerabilities of a business, 
and the basis for its long-term strategy. 
As long-term investors, engagement is 
also about developing eff ective lines of 
communication as we monitor and assess 
a holding and as we also proactively reach 
out to raise concerns or encourage change. 
We look to collaborate with management to 
the beneﬁ t of all and never hesitate to put 
our views forward on strategic steps, capital 
allocation, governance or standards. 
C A L E N D A R  O F 
E N G A G E M E N T
Over the 12 months from 1 July 2018, the 
team conducted 702 conversations in 
Edinburgh and around the world with 
companies held within portfolios, or their 
competitors, as well as potential investment 
ideas. 275 of those meetings included 
speciﬁ c or detailed discussion on an 
ESG matter.
The extracts below, taken directly from the 
Research team’s internal meeting notes, 
hopefully give a ﬂ avour of the range of 
topics discussed.
Q 2  2 0 1 9
Alphabet
E
S
G
We met with the chief ﬁ nancial offi  cer 
of Google’s parent company, Alphabet. 
During our meeting, we spent considerable 
time discussing the reputational and 
operational challenges facing the company. 
These include shareholder misgivings 
around governance, and employee 
discontent about conditions and treatment, 
as well high-proﬁ le concerns around 
privacy and unsavoury online content. 
To some extent, the company’s position 
at the forefront of a rapidly evolving 
industry makes some of these challenges 
unavoidable. However, management could 
do much more to address the concerns of 
stakeholders; a view we expressed during 
our meeting. 
We will continue to engage with Alphabet 
and will use our access to senior 
management to encourage improvement. 
For now, the company, its culture and its 
attitude towards stakeholders remains 
under close scrutiny. 
E N G A G E M E N T
22
ANNUAL ESG REPORT 2018—2019

EOG Resources
E
S
G
We enjoyed a timely and insightful 
meeting with the CEO and chief IT 
offi  cer of Houston-based oil & gas company 
EOG Resources. This meeting was an 
opportunity for management to update 
us on medium-term priorities in the 
context of the outlook for global oil supply 
and demand, as well as the company’s 
sustainability agenda. 
EOG’s disclosure has improved signiﬁ cantly 
in the last two years and its second 
sustainability report should include new 
scientiﬁ c-based targets for reducing 
methane intensity. By 2020, these targets 
will be linked to executive compensation. 
Work is also ongoing to provide scenario 
analysis for the long-term sustainability 
and value of EOG’s business in line with the 
Paris climate agreement framework. This is 
all encouraging progress. 
SM Investments
E
S
G
Evidencing ESG considerations might 
not yet be as established among emerging 
market companies as they are with many 
of their developed market counterparts; 
however, change is underway. Potential 
investment candidate SM Investment, the 
Philippines conglomerate, is an excellent 
case in point. It was the ﬁ rst company in 
the Philippines to be certiﬁ ed by the Global 
Reporting Initiative and it is a signatory 
to the UN Global Compact. The Sy family, 
which is a majority shareholder, is a 
genuine advocate of ESG and believes 
ESG principles very often make sound 
business sense. 
Our meeting was also an opportunity to 
quiz the company on a recent merger and 
what it meant for minority shareholders. 
The rationale given was reassuring and 
highlighted the family’s commitment to 
aligning its interests with stakeholders. 
Q 1  2 0 1 9
Ambev
E
S
G
This was a very useful meeting with this 
Latin American brewer, which, despite a 
tough few years, is an exceptionally well run 
and effi  cient company. Ambev sports amongst 
the highest returns in the global brewing 
industry, in our view, and this leadership 
extends to its sustainability credentials. 
More than R$1 billion has been invested in 
sustainability projects in Brazil in the last ﬁ ve 
years, addressing eight of the United Nations 
Sustainable Development Goals. 
By the nature of its business, water usage 
is substantial but numerous initiatives are 
underway to improve the sustainability of 
this vital input. The water used to produce 
one litre of beer has declined from over 
three litres to around 2.2. All water that 
doesn’t end up in the beer is recycled. 
Almost 100% of glass used is also recycled, 
while through the Smart Barley programme 
– a global project to digitally connect 
23
ANNUAL ESG REPORT 2018—2019

farmers with the company and map best 
practices – cereal productivity and quality 
should increase.
EssilorLuxottica
E
S
G
EssilorLuxottica is the product of a 2018 
merger between the French lens maker 
Essilor and the Italian eyewear group 
Luxottica. At a meeting in March, we raised 
a number of concerns around the cultural 
diff erences between the two companies. 
Those diff erences appeared central to the 
fact that integration plans were not yet 
agreed and that the search for a new CEO 
for the combined group was expected to 
take almost two years. Only days later, a 
number of press reports published clear 
details of governance conﬂ icts between the 
two businesses. 
Following our meeting, we concluded 
that over the longer term, the combined 
group may well be a powerful player in 
the strong growth market of corrective 
eyewear. However, we also agreed that 
management’s current behaviour was of 
material concern. From our perspective, 
the risk that cultural and management 
misalignment might have a negative 
operational impact on the company overall 
could not be ignored. 
Shin-Etsu
E
S
G
This proved a highly encouraging meeting 
with Japan’s largest chemical company. 
It was rewarding to hear the company 
acknowledge the importance of a 2015 
meeting between Walter Scott and Shin-
Etsu’s Chairman in the introduction of a 
more progressive dividend policy. This was 
strong conﬁ rmation that the Shin-Etsu 
board has been listening to our views, 
expressed both in writing and in numerous 
meetings over time, concerning its balance 
sheet and capital return policy. 
Q 4  2 0 1 8
3M
E
S
G
There are very few businesses that don’t 
have an ESG narrative to share. In a 
meeting with the chief ﬁ nancial offi  cer of 
3M, it was made clear that its customers 
aren’t just talking about wanting 
sustainable products anymore, they’re 
now demanding them. And 3M, is only too 
happy to oblige! In EVs (electric vehicles), 
3M provides myriad products and solutions 
that go into the design and creation of an 
electric vehicle. For instance, there is a 
signiﬁ cant and growing number of cameras 
in EVs. 3M off ers solutions to hide the 
cameras. It also develops vital components 
in EV batteries and produces sealants that 
bind plastic car parts together. By 2030 
more than half the cost of building a car 
will come from electronic components, 
and 3M has a broad range of solutions for 
both component makers themselves, and 
for the assemblers. 
Colgate-Palmolive
E
S
G
We enjoyed a wide-ranging discussion 
with a number of Colgate-Palmolive’s 
senior managers. Among other subjects, 
the conversation touched on director skills 
and qualiﬁ cations, sustainability, preferred 
shares and priorities for use of cash. 
Colgate has a well-structured board in 
terms of gender, independence and a good 
mix of tenure. Furthermore, all members of 
the audit committee are ﬁ nancial experts. 
The company’s 2018 proxy statement 
24
ANNUAL ESG REPORT 2018—2019

also provided more disclosure around the 
qualities sought in board members and 
the rationale for each quality. The listed 
qualities are business operations, industry, 
regulatory and public service, information 
technologies, international, corporate 
governance and diversity. 
We also discussed Colgate’s stated 
sustainability commitments and progress 
with its 2015-2020 plan. The aims of this 
plan range from reaching 1.3 billion children 
with the company’s ‘Bright Smiles, Bright 
Futures’ programme, to partnering with 
local and global organisations to bring clean 
water to under-served parts of the globe. 
Colgate has been awarded an “A” score for 
both water and climate by the CDP and it is 
committed to 100% recyclables (reusable, 
compostable) in all categories, and 25% 
recycled content for plastics by 2025.
Disney
E
S
G
During a conference call with a member of 
Disney’s investor relations team, one of the 
main topics of discussion was the recently 
announced revised executive remuneration 
package. We had voted against the ‘say 
on pay’ resolution at the 2018 AGM. The 
company had proposed a one-off  grant for 
its CEO. In our view, the quantum of the 
award was too large, the performance-
based conditions were not testing enough 
and there was little alignment with the 
interests of shareholders. 
The revised plan, acknowledged and 
discussed on this call, addressed these 
concerns, to a degree. Just as importantly, 
the revised plan provided positive evidence 
that shareholder feedback had meaningfully 
registered with the Board and that the 
experience will inform future pay awards. 
Q 3  2 0 1 8
CSL
E
S
G
A call with the chair of the remuneration 
committee and the company secretary of 
this global biotherapy company gave us the 
opportunity to discuss the remuneration 
framework introduced in the prior 
year. Shareholders had requested more 
simplicity, and changes were needed to 
make the remuneration workable. A much 
stronger alignment with shareholder 
interests has now been achieved, with 
remuneration more closely linked to 
strategy and performance.
 
Evidencing the new arrangements in action, 
even though 2018 saw CSL post some great 
results, there had been no increase in basic 
salaries. This is down to a move orienting 
remuneration more towards long-term 
awards. Annual bonus targets remain the 
same (net proﬁ t after tax) but cash ﬂ ow 
from operations has been used as a short-
term incentive metric for the ﬁ rst time. 
The latter now plays a bigger role given this 
metric is important for the company; it sets 
CSL apart and leads to a higher investment 
capability compared to peers. 
Nichols
E
S
G
As a soft drink supplier, primarily through 
its Vimto brand, Nichols is at the forefront 
of the debate around plastics. Following 
its half year results, we discussed this 
and other environmental issues with the 
company’s chief ﬁ nancial offi  cer (CFO). 
Vimto’s packaging is 100% recyclable so the 
issue is what the consumer then does with 
that packaging. To what extent soft drink 
25
ANNUAL ESG REPORT 2018—2019

distributors can change, or be responsible 
for, consumer behaviour, is a challenging 
question. Overall, 75% of packaging that is 
taken home is recycled, but recycling of ‘on-
the-go’ product categories is lower at 43%. 
Consumers tend to be less diligent with 
their recycling when out and about. 
The CFO stressed that the company would 
continue to work with its industry peers to 
enhance labelling and education on 
the recyclability of its products so that 
there is no misconception as to what 
can and what can’t be recycled. This will 
hopefully nudge consumer behaviour. The 
BFCA (the industry association that Nichols 
and most UK beverage companies are part 
of) will work with the UK government 
on a plastics consultation starting in the 
autumn. On the agenda will be a proposed 
industry-wide deposit return scheme, 
which would potentially take a reverse 
vending machine approach. 
Occidental
E
S
G
Having had a lengthy call a month 
previously, this meeting gave us the 
opportunity to discuss the carbon capture 
business in more detail among other ESG 
matters. Occidental is the world leader 
in carbon capture and storage through 
its sizeable enhanced oil recovery (EOR) 
business. This involves pumping CO2 into 
maturing oil ﬁ elds to increase resource 
recovery while sequestering enormous 
amounts of CO2 in the process. 
Occidental’s EOR is roughly a quarter of 
group production, making Occidental by 
far the largest EOR business in the world. 
The key input for EOR is carbon dioxide, 
after which the CO2 stays in the ground. 
Currently the majority of CO2 used in the 
process does not come from anthropogenic 
sources, so while CO2 sequestration isn’t 
helping very much in the battle against 
climate change today, in time it most 
deﬁ nitely will. 
Several pilots are underway that are 
exploring ways to economically capture CO2 
from big emitters, such as ethanol or coal 
plants. Ethanol plants in particular could 
be a major source of anthropogenic CO2 
given the extremely high CO2 content of the 
emitted residual gas. Further, the FUTURE 
Act is a federal incentive programme that 
off ers CO2 emitters an incentive of $35/
tonne of CO2 to implement carbon capture 
technology. The industry is still nascent 
but is growing rapidly and Occidental is 
very conﬁ dent that ongoing improvements 
will help create a signiﬁ cant source of CO2 
for the company. This will ensure it has a 
plentiful and cheap supply for its proﬁ table 
EOR business.
The company estimates that it has one 
billion barrels of oil resource that could 
be produced through EOR processes, 
assuming it has the necessary CO2 in 
place. The volume of CO2 sequestered 
underground in the EOR process is such 
that Occidental would be an enormous 
net positive contributor to greenhouse 
gas emissions. To put this in perspective, 
Occidental currently sequesters the 
equivalent CO2 of 200,000 internal 
combustion engine vehicles. 
26
ANNUAL ESG REPORT 2018—2019

P R OX Y  V O T I N G
R
esponsibility for proxy voting rests 
with the Research team rather than 
a separate corporate governance team, 
demonstrating that it is a duty which we 
take very seriously. We will, on the majority 
of occasions, vote in line with management 
proposals. However, the team will vote 
against management if a proposal is not 
considered to be in the best interests of 
clients. 
Through engagement ahead of an AGM 
we will often ask for clariﬁ cation and 
where we have concerns we will raise 
them, thereby off ering management the 
opportunity to state their case. 
Where we do decide to vote against 
management we will typically ensure 
that the reason for the vote, and the 
underlying point of contention or concern 
is communicated directly to the company. 
“Through engagement 
ahead of an AGM 
we will often ask for 
clarification and where 
we have concerns we 
will raise them, thereby 
offering management 
the opportunity to 
state their case.”
27
ANNUAL ESG REPORT 2018—2019

Q 2  2 0 1 9
RATIONALE FOR VOTES AGAINST MANAGEMENT 
RECOMMENDATION 
NO. OF VOTES
Political donations
6
Due to potential dilution >10%
57
Non-disclosure of individual board member's remuneration
4
Vague / Poorly-defined proposal
8
“Ad hoc” items
7
Bundled resolutions
8
Corporate governance issue
7
Compensation and stock option plans – not reasonable or excessive dilution
5
Excessive non-audit fees
1
Failure to address shareholders' concerns on the company's capital policy
1
Proposed dividend too low
2
Shareholder proposal – independent Board Chairman
2
Shareholder proposal – Eliminate Above-Market Earnings in Executive 
Retirement Plans
1
Shareholder proposal – Submit Severance Agreement (Change-in-Control) to 
Shareholder Vote
1
Shareholder proposal – one vote per share
1
Tender offer – not in best interest of long-term shareholders
1
Vague / Poorly-defined proposal and Bundled Resolution
1
BASED ON ALL / 
VOTED MEETINGS
NO. OF VOTES 
AS A % OF TOTAL 
PROPOSALS 
VOTED ON
Total all / voted proposals
1851
100
Total votes against Management 
Recommendation (MR)
113
6.1
Total votes against ISS 
recommendation
201
10.9
Total proposals voted ‘For’
1685 (of which 5 were against MR)
91 (of which 0.3 were 
against MR)
Total proposals voted ‘Abstain’
30 (25 against MR)
1.6
Total proposals voted ‘Against’
134 (of which 81 were against MR)
7.2 (of which 4.4 were 
against MR)
Total proposals voted ‘Withhold’
2 (of which 2 were against MR)
0.1
147
NO. OF 
MEETINGS
130
TOTAL VOTED 
AGMS
8
TOTAL VOTED 
SPECIAL 
MEETINGS
8
TOTAL MIX 
MEETINGS
1
TOTAL 
VOTED COURT 
MEETINGS
28
ANNUAL ESG REPORT 2018—2019

Q 1  2 0 1 9
RATIONALE FOR VOTES AGAINST MANAGEMENT 
RECOMMENDATION 
NO. OF VOTES
Political donations
2
Due to potential dilution >10%
9
Non-disclosure of individual board member’s remuneration
1
Vague / Poorly-deﬁ ned proposal
1
“Ad hoc” items
4
Additional independence
5
Bundled resolutions
2
Corporate governance issue – Board term > 1 year
1
BASED ON ALL / 
VOTED MEETINGS
NO. OF VOTES 
AS A % OF TOTAL 
PROPOSALS 
VOTED ON
Total all / voted proposals
451
100
Total votes against Management 
Recommendation (MR)
25
5.5
Total votes against ISS 
recommendation
49
10.9
Total proposals voted ‘For’
425 (of which 5 were against MR)
94.2 (of which 1.1 were 
against MR)
Total proposals voted ‘Abstain’
9 (8 against MR)
2.0
Total proposals voted ‘Against’
17 (of which 12 were against MR)
3.8 (of which 2.7 were 
against MR)
Total proposals voted ‘Withhold’
0
0.0
35
NO. OF 
MEETINGS
30
TOTAL VOTED 
AGMS
3
TOTAL VOTED 
SPECIAL 
MEETINGS
2
TOTAL 
VOTED COURT 
MEETINGS
29
ANNUAL ESG REPORT 2018—2019

RATIONALE FOR VOTES AGAINST MANAGEMENT 
RECOMMENDATION 
NO. OF VOTES
Political donations
1
Due to potential dilution >10%
8
Non-disclosure of individual board member’s remuneration
1
Shareholder proposal – deduct impact of stock buybacks from executive pay
1
23
NO. OF 
MEETINGS
18
TOTAL VOTED 
AGMS
4
TOTAL VOTED 
SPECIAL 
MEETINGS
1
TOTAL VOTED 
MIX MEETINGS
Q 4  2 0 1 8
BASED ON ALL / 
VOTED MEETINGS
NO. OF VOTES 
AS A % OF TOTAL 
PROPOSALS 
VOTED ON
Total all / voted proposals
225
100
Total votes against Management 
Recommendation (MR)
11
4.9
Total votes against ISS 
recommendation
29
12.9
Total proposals voted ‘For’
210 (of which 1 was against MR)
93.3 (of which 0.4 were 
against MR)
Total proposals voted ‘Abstain’
0
0.0
Total proposals voted ‘Against’
15 (of which 10 were against MR)
6.7 (of which 4.4 were 
against MR)
Total proposals voted ‘Withhold’
0
0.0
30
ANNUAL ESG REPORT 2018—2019

RATIONALE FOR VOTES AGAINST MANAGEMENT 
RECOMMENDATION 
NO. OF VOTES
Bundled resolutions
3
Due to potential dilution >10%
19
Non-disclosure of individual board member’s remuneration
2
Poison pills
1
Political donations
4
BASED ON ALL / 
VOTED MEETINGS
NO. OF VOTES 
AS A % OF TOTAL 
PROPOSALS 
VOTED ON
Total all / voted proposals
270
100
Total votes against Management 
Recommendation (MR)
29
10.7
Total proposals voted ‘For’
236
87.4
Total proposals voted ‘Abstain’
3
1.1
Total proposals voted ‘Against'
31 (of which 26 were against MR)
11.5 (of which 9.6 were 
against MR)
Total proposals voted ‘Withhold’
0
0.0
24
NO. OF 
MEETINGS
18
TOTAL VOTED 
AGMS
6
TOTAL VOTED 
SPECIAL 
MEETINGS
0
TOTAL VOTED 
MIX MEETINGS
Q 3  2 0 1 8
31
ANNUAL ESG REPORT 2018—2019

W
e recognise the role that all 
investment ﬁ rms have to play 
in raising standards, and encouraging 
greater transparency and reporting. 
Where appropriate, we participate in 
discussions and regularly provide input 
to industry initiatives. 
From industry bodies pushing for higher 
standards, independent organisations 
seeking to raise awareness and prompt 
change in very particular areas and groups 
of investors seeking to share best practice, 
the number of groups that we could sign 
up to is ever increasing. 
We are now members or signatories to a 
number of select groups that we believe 
best-represent the industry in pushing for 
meaningful change or where we feel the 
educational element will complement our 
own research in a material way. 
Other groups are regularly assessed and 
we attend events and consider the work of 
many organisations where for now we have 
decided against a more formal association.
— We became a PRI signatory 
in 2017. Our 2019 rating is 
A+, A, B.
— Our commitment to the UK 
Stewardship Code dates 
back to 2010.
That commitment has 
been consistently rated 
Tier 1 by the UK Financial 
Reporting Council (FRC), 
owner of the Code. 
— We made public our 
commitment to the 
Japanese Stewardship 
Code on its launch in 2014.
 — We are a member of the 
CDP (formerly, Carbon 
Disclosure Project).
— We are a longstanding 
member of the UK 
Investment Association, 
and more recently have 
been much more actively 
involved in a number of 
initiatives that we deem 
important for the industry.
— We are a member of 
Climate Action 100+ and 
engage with companies 
and other investors to 
pursue change in this 
ever-more critical area.
C O L L A B O R A T I O N
“We recognise the role that all investment 
firms have to play in raising standards, 
and encouraging greater transparency 
and reporting.”
32
ANNUAL ESG REPORT 2018—2019

W
e expect the companies in which 
we invest on behalf of our clients to 
strive towards sound ESG practices. And 
we expect no less of ourselves.
We are proud of our track record in 
retaining, and motivating, staff . We believe 
our culture is distinct, and that its strength 
has been key to the ﬁ rm’s success. We have 
always sought to recruit individuals with 
varied backgrounds, personalities and 
academic interests, all united by a 
passion for what we do. 
Operationally our offi  ces, built in the 
early and mid-1800s off er both beneﬁ t 
and challenge. However, where we 
can, we strive to ensure effi  ciency and 
sustainability. In 2019, we switched to 
100% green energy, draught proofed 
windows and installed more energy-
effi  cient boilers. 
Similarly, we continually look for ways to 
both cut back on the need for recycling and 
to recycle as much as we can effi  ciently. In 
the ﬁ rst half of 2019, we recycled 75% of our 
total waste. 
“We have always sought to recruit individuals with varied 
backgrounds, personalities and academic interests, all 
united by a passion for what we do.”
W E  E X P E C T  N O  L E S S 
O F  O U R S E LV E S
In considering the community in which 
we all work and live, we have supported 
a range of philanthropic causes across 
education, health, historical architecture 
and local communities.
 
Oversight of our ESG-related actions 
today, as well as responsibility for the 
encouragement and direction of ongoing 
improvement falls to an ESG Group. 
Senior colleagues from Research, 
Investment Operations, Client Service, 
Client Operations and Communications 
form that Group reﬂ ecting the importance 
of its work and the need to address these 
issues across the ﬁ rm’s activities.
It goes without saying that there is always 
more we can do. In that respect, we are on 
the same journey as many of the companies 
in which we invest. And like them, we are 
committed to exploring new and innovative 
ways to meet the high ESG standards we 
set ourselves. 
75%
—WASTE RECYCLED 
IN FIRST HALF 
OF 2019—
33
ANNUAL ESG REPORT 2018—2019

Quarterly ESG Commentaries
Research Papers
Responsible Investing: An Integrated 
Investment Approach (2018)
Research Journal articles 
Journal 8
A Healthy Balance – The healthcare 
industry is changing fast, amid rising 
demand and rapid advances in treatment. 
Co-Head of Research, Alex Torrens, and 
Investment Managers Tom Miedema and 
Maxim Skorniakov consider the economic, 
social and technological issues faced by 
the industry.
F U R T H E R  R E A D I N G
Shake Up Your Make-Up – The challenges 
in building a diverse workforce and how 
best to overcome them.
Opening Minds To Diversity Of Thought – 
Sean Brocklebank, Senior Teaching Fellow 
at The University of Edinburgh makes the 
case for cognitive diversity within teams.
Forced Labour – The eff ect of forced labour 
on supply chains worldwide. Interview with 
Rosey Hurst, founder of Impactt.
Not Paying By The Rules – Working for low 
or no pay is widely associated with far-off  
climes, yet it is increasingly common in 
developed markets.
T H E  R E P O R T S  L I S T E D  B E L O W  A R E  AVA I L A B L E  O N 
R E Q U E S T  F R O M  C L I E N T S E R V I C E @WA L T E R S C O T T . C O M
34
ANNUAL ESG REPORT 2018—2019

ESG Policy
Engagement Policy
Proxy Voting Policy
Conﬂ icts of Interest Policy
In addition, Walter Scott’s response to 
the UK Stewardship Code and Japan’s 
Stewardship Code is available on our 
website: walterscott.com
T H E  F O L L O W I N G  P O L I C I E S  A R E  AVA I L A B L E  O N  R E Q U E S T
35
ANNUAL ESG REPORT 2018—2019

REGULATORY INFORMATION
Walter Scott & Partners Limited (Walter 
Scott) is an investment management firm 
authorised and regulated in the United 
Kingdom by the Financial Conduct 
Authority in the conduct of investment 
business. Walter Scott is a wholly owned 
non-bank subsidiary of The Bank of New 
York Mellon Corporation. Walter Scott is 
registered in the United States under the 
Investment Advisers Act of 1940.
Walter Scott provides investment 
management and advisory services to 
non-UK clients and, Walter Scott is 
responsible for portfolios managed on 
behalf of pension plans, endowments and 
similar institutional investors.
Walter Scott is registered with the 
SEC in the United States of America, 
as an Exempt Market Dealer in all 
Canadian provinces and, with the FSB 
in South Africa. 
IMPORTANT INFORMATION 
FOR USA 
Walter Scott & Partners Limited (Walter 
Scott) is authorised and regulated in 
the United Kingdom by the Financial 
Conduct Authority. Walter Scott is also 
registered as an investment adviser 
with the US Securities and Exchange 
Commission (SEC). Securities offered 
in the US by BNY Mellon Securities 
Corporation (BNYMSC), a registered 
broker-dealer. Investment advisory 
products offered in the US through 
BNYMSC employees acting in their 
capacity as associated investment adviser 
representatives of BNYMSC. 
IMPORTANT INFORMATION 
FOR CANADA
Walter Scott is registered as an Exempt 
Market Dealer (EMD) (through which 
it offers certain investment vehicles 
on a private placement basis) in all 
Canadian provinces (Alberta, British 
Columbia, Manitoba, New Brunswick, 
Newfoundland & Labrador, Nova 
Scotia, Prince Edward Island, Quebec, 
Saskatchewan and Ontario) and is also 
availing itself of the International Adviser 
Exemption (IAE) in these same provinces 
with the exception of Prince Edward 
Island. Each of the EMD registration 
and the IAE are in compliance with 
National Instrument 31-103, Registration 
Requirements, Exemptions and Ongoing 
Registrant Obligations.
IMPORTANT INFORMATION 
FOR AUSTRALIA
This material is provided on the basis 
that you are a wholesale client as defined 
within s761G of the Corporations Act 
2001. Walter Scott is registered as a 
foreign company under the Corporations 
Act 2001. It is exempt from the 
requirement to hold an Australian 
Financial Services License under the 
Corporations Act 2001 I respect of 
these services provided to Australian 
wholesale clients.
IMPORTANT INFORMATION 
FOR SOUTH AFRICA
Walter Scott is registered as a Foreign 
Financial Services Provider with the 
Financial Sector Conduct Authority in 
South Africa. Registration No. 93685.
RISK FACTORS & IMPORTANT 
INFORMATION
The statements and opinions expressed 
in this report are those of Walter Scott as 
at the date stated and do not necessarily 
represent the view of The Bank of New 
York Mellon Corporation, BNY Mellon 
Investment Management or any of their 
respective affiliates.
BNY Mellon Investment Management 
and its affiliates are not responsible 
for any subsequent investment advice 
given based on the information supplied. 
This is not intended as investment 
advice but may be deemed a financial 
promotion under non-US jurisdictions. 
The information provided is for use by 
professional investors only and not for 
onward distribution to, or to be relied 
upon by, retail investors.
All investments have the potential 
for profit or loss and your capital may 
be at risk. Past performance is not a 
guide to future results and returns 
may increase or decrease as a result of 
currency fluctuations. 
Investing in foreign denominated and/
or domiciled securities involves special 
risks, including changes in currency 
exchange rates, political, economic, 
and social instability, limited company 
information, differing auditing and legal 
standards, and less market liquidity. 
These risks generally are greater with 
emerging market countries.
The material contained in this report 
which may be considered advertising, is 
for general information and reference 
purposes only and is not intended to 
provide or be construed as legal, tax, 
accounting, investment financial or other 
professional advice on any matter, and 
is not to be used as such. The contents 
may not be comprehensive or up to date 
and are subject to change without notice. 
Walter Scott assumes no liability (direct 
or consequential or any other form of 
liability for errors in or reliance upon 
this information.
If distributed in the UK or EMEA, 
this report may be deemed a financial 
promotion provided for general 
information only and should not be 
construed as investment advice. This is 
not investment research or a research 
recommendation for regulatory 
purposes. This report is not intended for 
distribution to, or use by, any person or 
entity in any jurisdiction or country in 
which such distribution or use would be 
contrary to local low regulation. Persons 
into whose possession this report comes 
are required I inform themselves about 
and to observe any restrictions that 
apply to distribution of this report in 
their jurisdiction.
As stated this document does not 
constitute investment advice and should 
not be construed as an offer to sell or a 
solicitation to buy any security or make 
an offer where otherwise unlawful. 
You should consult with your advisor 
to determine whether any particular 
investment strategy is appropriate. 
This document should not be published 
in hard copy, electronic form, via the web 
or in any other medium accessible to the 
public, unless authorised by Walter Scott.
Trademarks, service marks and logos 
belong to their respective owners.
©  2019 The Bank of New York Mellon 
Corporation. All rights reserved.
36
ANNUAL ESG REPORT 2018—2019

Walter Scott has been supporting emerging Scottish talent since 1988. In the same way that 
we believe that different perspectives within the team generate the best investment ideas, 
so we believe that our art collection should incorporate a wide range of work from 
an eclectic group of contemporary artists.
Our commitment to the art community is also reflected in our established partnerships 
with – and sponsorship of prizes at – the Royal Scottish Academy, the Royal Glasgow 
Institute of The Fine Arts and the Royal Scottish Society of Painters in Watercolour.
Donald Provan
Green And Silver Shoal
© Donald Provan
37
ANNUAL ESG REPORT 2018—2019

38
WA L T E R  S C O T T  &  P A R T N E R S  L I M I T E D ,  O N E  C H A R L O T T E  S Q U A R E ,  E D I N B U R G H  E H 2  4 D R
T E L :  + 4 4  ( 0 ) 1 3 1  2 2 5  1 3 5 7  .  F A X :  + 4 4  ( 0 ) 1 3 1  2 2 5  7 9 9 7
W W W. WA L T E R S C O T T . C O M
Registered in Scotland 93685. Registered Offi  ce as above. Authorised and regulated by the Financial Conduct Authority.
FCA Head Offi  ce: 12 Endeavour Square, London E20 1JN · www.fca.org.uk