Corporate Governance Guidelines (CGG)

Corporate
Governance
Guidelines (CGG)
January 2024

Corporate Governance Guidelines (CGG)

Contents

1 Overview of key principles and approach ....................................................................................................................... 4
2 Role, structure and operation of boards .......................................................................................................................... 5
3 Board committees ................................................................................................................................................................................ 8
4 Compensation .......................................................................................................................................................................................... 9
5 Audit, risk and control .................................................................................................................................................................. 11
6 Shareholder rights ............................................................................................................................................................................ 12
7 Reporting .................................................................................................................................................................................................. 14
8 Social and environmental factors ...................................................................................................................................... 16
9 Voting matters ...................................................................................................................................................................................... 18

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Corporate Governance Guidelines (CGG)

The following guidelines apply to Columbia Threadneedle Investments’ client accounts tothe extent agreed upon and/or permissible including voting on behalf of reo® (Responsible
Engagement Overlay) service clients, which gives investors access to our overall engagement andproxy voting service offerings.
As an asset management business, we seek to act in the best
economic interests of clients when carrying out our investment
activities. Our investment clients are retail and institutional
investors, including corporate pension funds.
Our voting guidelines are applied to all listed equity client
portfolios. However, our institutional clients always have the rightto determine how we vote their securities. We will always comply
with those requests.
In addition to these guidelines, general and country-specificvoting guidelines are maintained and applied within the voting
process. Voting guidelines provide greater detail on resolutions
that will (and will not) be supported and are drawn directly fromthese Corporate Governance Guidelines.

In executing votes, where companies put forward a strong casefor not complying with our voting guidelines, we will take this into
account and adjust our vote if we believe the company is acting
in the best economic interests of shareholders (and, thus, ourclients). We apply our guidelines to client portfolios in a mannerthat considers our clients’ respective investment objectives andbest economic interests. This could result in our voting on amatter the same way (or differently) for different clients.
If you wish to clarify anything in these guidelines, pleaseemail your relationship manager or the Responsible Investment
team at Governance@columbiathreadneedle.com. The
Responsible Investment team is responsible for and reviews
this document annually.

Note: The following guidelines do not apply to Pyrford International Limited.

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Corporate Governance Guidelines (CGG)

1 Overview of key principles
and approach
Well governed companies are better positioned to manage
risks, identify opportunities, and deliver sustainable growth
and returns for our clients. These guidelines establish aconsistent philosophy and approach to corporate governanceand the exercise of voting rights. The approach is based on theoverarching principles of:n An empowered and effective board and management team;n Appropriate checks and balances in company management
structures;n Effective systems of internal control and risk management
covering all material risks, including environmental, socialand corporate governance (ESG) issues;n A commitment to promoting throughout the company aculture of transparency and accountability that is groundedin sound business ethics;n Compensation policies that reward the creation of long-term
shareholder value through the achievement of corporate
objectives; andn A commitment to protecting the rights and interests of all.
We recognize that such principles may be expressed differently
in different markets. Therefore, our voting policies take accountof local practices and are applied in a pragmatic fashion that4

reflects an integrated understanding of local and international
good practice. In all cases, we aim to achieve the same result:the preservation and enhancement of long-term shareholder
value through management accountability and transparency
in reporting.
We also recognize that companies are not homogeneous andsome variation in governance structures and practice is to be
expected. Achieving best practice in corporate governance isa dynamic process between the board, management, andshareholders.
We encourage companies to engage in the process of shaping
and meeting evolving standards of best practice. Although
our voting is strongly rooted in a clear set of corporate
governance principles, we approach each company’s case on
its merits using our expertise, discretion, and dialogue withcompanies to do so. For this reason, we encourage companies
to contact us with information about any governance practices
and challenges unique to the company. When we do not votewith management’s or the board’s recommendations, we may
choose to inform the company of our voting decision and provide
comments to explain the specific concerns with the resolutions
we did not support.

Corporate Governance Guidelines (CGG)

2 Role, structure and operationof boards
We use the term “board” to describe the board of directors
and similar supervisory decision-making bodies. The board isultimately responsible for the management of the company.
This is mainly achieved through the delegation of powers to
executive management. The board should receive the reportof executive management on the conduct of the business andregularly question management on these matters. However,certain matters should be reserved for the board.
The board is responsible for setting and testing strategy
proposed by executive management, determining the risk
appetite for the business, ensuring the independence andeffectiveness of external audit, and for succession planning ofboth executive management and the board.
The structure, composition and operation of boards will vary fromcountry to country and company to company. Certain elementsof effective boards are universal, and these are detailed below
under the following sub-headings:
n Roles and independence;n Competence, objectivity and refreshment;n Effective functioning of boards; andn Communication and accountability to shareholders.

Roles and independence
The composition of the board is of the utmost importance.
Boards should have meaningful representation of both executive
and non-executive directors. Non-executives should be wholly
independent of the company, although we recognize that, in certain
cases, connected non-executives have a valuable role to play.
The role of the chair and separation of principal roles
The roles of the chair and chief executive officer (CEO) aresubstantively different and should be separated. We regard
separation of the roles as important for securing a properbalance of authority and responsibility between executive
management and the board, as well as preserving accountability
within the board. If for any reason the roles are combined (e.g.,over an unexpected transitional period) this should be explained
and justified in the report and accounts. In all such cases, astrong senior independent non-executive director should be
nominated (i.e., a lead independent director).
Executive directors
Including executives in board meetings is essential to enhance
discussion and allow independent directors to gain the fullest
understanding of company operations. In markets where
customary, we encourage the appointment of key executives

to the board alongside the CEO and the chief financial officer(CFO). The presence of other executives provides additional
company knowledge for the board and ensures the board is not
solely dependent on the CEO for input relating to the company’s
operations and strategies. However, the number of executive
directors should not outweigh the number of independent
non-executives.
Non-executive directors
We assess the number of directorships an individual director
holds to ensure they have sufficient time and energy to performtheir role as a non-executive director properly as this is ademanding role. Factors that determine the appropriate numberof directorships are the size of the company, its complexity, its
circumstances, other commitments that a director has and theresults of board evaluation, among others. We consider thatholding multiple directorships in large companies can be excessive
even for a full-time non-executive director, especially when
considering board committee participation. Multiple directorships
should be avoided for a full-time executive. For complex
companies, particularly in developed markets, we may vote against
non-executive directors who hold more than five directorships.
Proportion of non-executive directors on the board
Difficult decisions that center on the best interest of shareholders
arise from open and direct interplay between boards andcompany executives. It is important to have enough independent
non-executive directors for an adequate diversity of views and tofulfil committee membership quotas. We expect all widely-heldcompanies to have a majority of independent directors.
For companies with controlling shareholders, we expect there
to be a minimum of one-third of fully independent directors on
the board.
Independence of non-executive directors
Independence of individual directors is valued, but a well- balanced
board is valued above all. We will support non- independent
directors when they bring skills, sector knowledge and otherexperience that justify their presence on the board, particularly
where the appropriate balance of independence is maintained.
The criteria for the independence of directors draw on a variety ofstandards, including the Organisation for Economic Co-operation
and Development (OECD) Principles of Corporate Governance,
national corporate governance codes, listing rules, and guidance
provided by the International Corporate Governance Network,
among others. We favor a principles-based approach, whichseeks to ensure that directors can act in the interests of thecompany and its shareholders. Companies should consider

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Corporate Governance Guidelines (CGG)

using the corporate governance report or annual shareholder
meeting materials to explain the board evaluation process,and to justify the value that non-independent directors bringto the board.
n Not have close family ties with the company’s advisers,
directors or senior employees;n Not serve as a board committee chair if they have servedon the board for a period of time that may hinder their
independence of thought;

Independence of employee representatives
While a number of countries have legislation mandating a certain
percentage of employee representatives on the board, we do
not consider these individuals to be fully independent. Hence,
we expect companies domiciled in countries with mandatory
co-determination (the process by which employees elect theirrepresentatives to the board) or employee representation
to ensure that the board and its committees have adequate
representation of truly independent directors.

n Not hold cross-directorships or have significant links withother directors (see “Interlocking boards” below);

Competence, objectivity and renewal

n Not be major shareholders or representatives of any special
interest group, including government representatives in casesof state ownership or representatives of affiliated companies;

Diversity, competencies and perspectives

n Have no significant commercial involvement with thecompany as professional advisers, major suppliers
or customers;n Not be entitled to performance-related pay, stock options,pensions, or benefit from large donations to charitablecauses of their choice;n Not normally hold other directorships in companies in aclosely-related industry so as to avoid potential conflictsof interest.
Interlocking boards
We seek to ensure that directors are not only independent fromthe company, but also of one another. We expect companies todisclose interlocking board relationships and to explain how theindependence of individual directors is preserved when directors
jointly serve on two or more of the same boards.2
Extensive board service and independence
Prolonged membership on a board jeopardizes independence
as directors may become close with management and overly
invested in prior strategic decisions. Independence is criticalto ensuring shareholders have adequate voice inside theboardroom. After a certain length of board service, directors may
not be considered fully independent and it may be inappropriate
for such directors to serve on committees, such as the audit
committee, where absolute independence is a key requirement.
We recognize that there is no fixed time period where a director
categorically loses independence. Nonetheless, we will leveragea respective country’s own regulatory requirement regarding
independence where specified. In North America, we will assess
whether the average board tenure of the company is significantly
beyond the respective market’s average when considering theboard’s overall balance.
Where the appropriate balance of independence is not met, we will
analyze whether to support the re-election of long-standing directors.

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A relevant and suitably diverse mix of skills and perspectives iscritical to the quality of the board and the strategic direction of thecompany. Companies should therefore strive to widen the pool ofpotential candidates for board and management roles to ensure
they draw on the richest possible combination of competencies
and experiences.
In all cases, candidates must be selected for their ability to oversee
and enhance long-term company performance. Boards should recruit
members with the appropriate combination of skills and experience,and should affirm the value of individual diversity, including
gender, racial, ethnic, national origin, professional backgroundand other relevant factors that may enhance the board’s overall
performance. As boards cannot be transformed overnight, we look
for a statement that sets out the board’s approach to promoting
diversity at the board, executive management, and companywide workforce level. We welcome disclosure of specific diversity
targets set by the board and subsequent reporting on performanceagainst these targets. Where disclosure is absent and appropriate
diversity levels across gender, racial and ethnic representation
have not been met, we will normally not support the re-election of
nomination committee chairs or other relevant directors.
Re-election of directors
To ensure that it retains an open and critical perspective, the board
should be continually refreshed. For this reason, all directors should
be required to submit themselves for re-election at regular intervals.
We prefer to have all directors standing for annual election tostrengthen the accountability of the board to shareholders. Failingthat, we encourage the chair of the board, as well as the chairsof the audit, compensation and nomination committees to standfor annual re-election to strengthen accountability for the corefunctions of the board. We also believe that a minimum of one-thirdof board members should stand for election annually.
Nomination of directors
We strongly believe that a board nominating committee
composed of a majority of independent non-executive directors
is best placed to identify and put forward suitable candidates
for the board. Shareholders should only put forward candidates
where there is clear evidence of ineffective board oversightand unwillingness to correct the problem—or where a

Such interlocking relationships can raise concerns when there is an imbalance of power between the two directors.

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Corporate Governance Guidelines (CGG)

cumulative voting system or similar arrangement encourages
direct shareholder participation in board nominations. We
expect companies to put forward only one candidate foreach available position as an indication that the company isclear about the value each director brings to the board. We
encourage companies to specify each candidate’s qualifications,experiences and skills that are of relevance and importance tothe board’s oversight of company strategy.
Balanced composition
We will consider voting against the chair or members of
nominating committees who have not constructed appropriatelybalanced, independent boards. Indicators include: an overreliance on long-standing members; an over-reliance on affiliateddirectors; and a lack of appropriate diversity characteristics,
including gender, race, nationality, ethnicity, etc., that reflect thenature, scope and aspirations of the business.

Effective functioning of boards
Board size
In the case of a two-tier board structure, neither board should
be large: between five and 10 members typically is appropriate.
A unitary board normally should have between five and 15
members. In the case of overly large boards and in the absenceof a commitment to reduce board size, we may withhold support
from the nominating or corporate governance committee chair
unless clear justification has been provided explaining the needfor such a large board.
Two-tier boards
We are agnostic as to the merits of a two-tier board as opposed
to a unitary board, and we recognize that a two-tier board
structure is the norm in many markets. At the same time, we areaware that there can be challenges in communication between
a supervisory board and a management board. Where there
is more than one body forming the board, companies should
maintain an effective mechanism for the various elements of theboard to work together and should explain how this happens.
This system should ensure the most effective use is made of all
individuals involved so that the company can optimize the unique
skills and experiences of their directors.
Board evaluation
Board evaluations are an important tool for improving board
performance. All boards should implement an evaluation
process that considers the effectiveness of the entire board, itscommittees, the contributions made by each member, including
its systems for interaction between the board and company
management, areas for improvement, and behaviors andoverall board culture. The nominating or corporate governancecommittee may oversee the evaluation process and shouldreport general findings and areas for improvement publicly toshareholders. Large or systemically important companies should
leverage professional, independent assistance to facilitate
evaluations on a periodic basis (typically every three years).

Board meetings & attendance
The board should meet at regular intervals to ensure effective
oversight of the company. We regard six meetings per year asa minimum guidance, and often more frequent meetings arenecessary.
We also expect directors to attend the annual general meeting(AGM), and to facilitate communication with the shareholders whomthey represent. The company should disclose the attendance recordof individual directors in the AGM report, as well as mechanisms
for shareholders to communicate directly with the board. We may
withhold support from directors with poor attendance records orboards who fail to accommodate shareholder dialogue.
Non-executive director (NED) only meetings
NEDs should meet without executive board members present ona regular basis and when circumstances demand. They should
also have at least one meeting per year to hold an unconstrained
discussion away from day-to-day business matters. Ideally, thisshould be chaired by a senior or lead independent director, although
the chair may be present (provided they are a non- executive).
Conversely, in the case of two-tiered boards, supervisory boards
should meet with executives on a regular basis to minimize the riskthat NEDs could become marginalized from the business.
Training and mentorshipAll directors should receive appropriate training when being
onboarded. Ideally, the onboarding process should include
assignment of a board mentor. Mentors are normally long- or
medium-standing directors willing to take on the responsibilityof providing ad hoc support and context for new directors.
All directors should regularly be provided opportunities to attend
conferences, classes, or webinars to upskill and remain relevant.
Such offerings may be an outcome of the board evaluation
process or a request from directors or management directly. We
encourage companies to develop regular director training plansthat include educating directors on relevant environmental, socialand governance matters.

Communication and accountability
The board should proactively and regularly make itself available
for consultation with shareholders. To this end, boards should
appoint a senior or lead independent director to fulfil a formal
liaison role with key stakeholders. This is most important incases where the CEO also holds the chair position, has executive
responsibilities or was not independent on appointment.
Where appropriate, NEDs should be prepared to discuss mattersof strategy, performance, risk, capital structure, standardsof operational practice, and oversight of company-specificenvironmental and social matters.

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Corporate Governance Guidelines (CGG)

3 Board committees
We encourage companies to move towards fully independent
audit and compensation committees, as well as a nominationcommittee composed of a majority of independent directors. Allboard committees should report on their activities annually toshareholders (see section on “Reporting” below).
Audit
The audit committee provides an important safeguard forshareholders and for other stakeholders that rely upon the
integrity of the report and accounts as a basis for their investingin the company.
The audit committee should consist exclusively of NEDs, allof whom should be independent, and consist of at least three
individuals. At least one should have recent and relevant
financial, accounting or audit experience, and all audit committee
members should be financially literate. The committee should
be responsible for assessing the effectiveness, independence,
qualifications, expertise and resources of the external auditors(including the quality of audit) and oversee the process of review
and issue of the accounts.
The audit committee should also be responsible for monitoring
and approving related-party transactions and should ensurethat any material related-party transactions do not disadvantage
minority shareholders.
The audit committee is also responsible for publishing the annual
audit report, which is essential for investors to evaluate theoverall health of the business (see “Reporting” below). The audit
committee report should provide meaningful disclosure on thecommittee’s work and the issues it has addressed. In the eventof a significant restatement of accounts or material weakness ininternal controls, we may not support the election of members of
the audit committee who we consider have not fulfilled their duty
to shareholders. We may also not support the election of these
director to the boards of other unrelated companies.
Compensation
The compensation (or remuneration) committee is responsible
for setting the compensation of executive directors andsenior executives and should coordinate with the company’s
human resources function to develop a coherent and effective
compensation strategy throughout the company. As a bestpractice we believe that compensation committees should
consist exclusively of independent non-executive directors.
We encourage compensation committees to engage in direct
dialogue with shareholders when developing compensation
policies. (See “4. Compensation” below).

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The compensation committee must consult with other board
functions to ensure that pay mechanisms are well aligned withstrategic goals and the company’s appetite for risk. In particular,
the compensation committee should work with the board and its
committees to determine the appropriate balance in the allocationof profits to employees as incentive payment, to shareholders as
dividends, and for retention or reinvestment in the business itself.
The committee’s fiduciary duty is also to ensure that the amountof payment to management is fair and appropriate. Finally,
the committee should be attentive to compensation acrossthe company to ensure management is delivering on strategic
priorities, especially those that enhance shareholder returns,
and managing risk effectively.
We may withhold our support from the chair and/or members of
the compensation committee where there are significant concernswith the committee’s decision-making, or where issues we haveidentified with pay policies and practices remain unaddressed.
Nomination
A nomination committee should oversee all board and senior
executive appointments. Normally it should be a committee
of independent non-executive directors and the board chair.
In certain instances, it may be appropriate for the committee
to leverage management’s advice. Although we prefer a fully
independent committee, we recognize that a non-independent
director or representative of a large shareholder may beappropriate in some circumstances.
Corporate governanceWe recognize that companies may choose to have the nominating
committee or a specific corporate governance committee responsible
for corporate governance practices and procedures. Regardless ofthe structure, the committee should monitor emerging regulatory andindustry standards, strive to achieve global best practice, and should
consult with shareholders to understand investor expectations.
Corporate responsibility and sustainability
We believe that committees with responsibilities related tooversight of corporate social responsibility, ethics or sustainability
are prudent for purposes of risk management. For large companies
exposed to significant ESG risks, such committees are essential toprotecting shareholder value and managing reputational risk.
Business ethics
Whether it is through a committee such as the audit committee
or a general board review, it is important that the board affirm
its responsibility for reviewing internal business ethics systems,
practices, and processes.

Corporate Governance Guidelines (CGG)

4 Compensation
Levels of compensation and other incentives should be designed
to promote sustainable, long-term shareholder value creation andreflect the executives’ work and contribution to the company. No
director should be involved in setting their own compensation.
Given the consistent upward trend in total compensation, we
expect careful usage and robust justification of benchmarks.
We also wish to see comprehensive disclosure of performancetargets as well as actual performance against pre-set targets.
We expect justification of base pay levels awarded, and that asignificant proportion of total compensation be variable andsubject to appropriately challenging performance conditions.
We do not set guidelines for levels of compensation beyond theprinciples mentioned below.
Level of pay
We expect boards to demonstrate an understanding of (andsensitivity to) the views and expectations of shareholders and otherkey stakeholders, such as employees, when setting executive pay.
Relationship to strategy and risk
We expect companies to demonstrate the alignment of theircompensation policy with their overall business strategy andplanning. Performance metrics should relate to the company’s
articulated strategy and risk tolerance. Targets should beconstructed to align executive incentives to the interests oflong-term shareholders and should not create incentives for
executives to undertake short-term risks that might imperil
sustainable long-term performance. We advocate for risk-related
preconditions to bonus awards to ensure inappropriate incentive
payments are not awarded in the event the company’s financial
strength or credit quality deteriorates.
Disclosure
We seek appropriately detailed disclosure of board andmanagement compensation packages (See “Compensationcommittee report” below). The purpose of the compensation
report should not simply be related to compliance, rather
it should be to enhance investors’ understanding of thecommittee’s practices, processes, and goals.
Following the award of the bonus, companies should provide ameaningful analysis in the compensation report of the extent towhich relevant targets were met. The compensation report should
be written in plain language and include the tax implications forthe company.
At a minimum, the compensation of all directors, including all nonexecutive and executive directors, should be disclosed individually.
We look for banded disclosure of those individuals at sub-board
level who make a significant contribution to the company.

Executive contracts and pensions
Prior to employment contract agreements, companies should
actively consider the potential rewards concerning severance inthe event of inadequate performance and clarify the performance
conditions under which such severance benefits are to bepayable. We encourage companies to seek mitigation in case a
director has taken up employment elsewhere and to adjust thelength and size of any payments accordingly. We recommend thatcompanies make larger severance packages the subject of ashareholder vote.
Share schemes/ share compensation arrangements
We believe that strict guidelines should be observed regarding
the issue, or potential issue, of shares for incentive schemes(also known as equity-based compensation plans) both as tothe proportion of shares issued and to the rate at which these
are issued each year. For us to accept large share schemes,
the commercial drivers must outweigh the dilutive impacts. If
the company is insufficiently transparent regarding the detailsof such schemes, we may abstain or vote against them.
Equity incentive plans
We support the principle of motivating and rewarding executives
through the granting of equity incentives.
Performance targets for equity incentive plans should be clearly
disclosed and challenging. We believe that the compensationcommittee is in the best position to determine the mostappropriate performance metrics for driving the long-termbusiness strategy. However, overall compensation packages
should reflect a range of performance.
Generally, we believe executive pay plans should reflect a balanceof financial, operational, and relative performance targets. We
strongly believe that exceptional performance over a significant
period merits an exceptional level of compensation. We oppose
retesting of performance conditions and may withhold supportof compensation plans where the compensation committee has
used its discretion to relax any performance targets previously
approved by shareholders.
We will consider one-off equity awards on a case-by-case basis
in light of justification provided by the company. However,frequent use of exceptional awards raises questions over theadequacy of the overall compensation strategy and effectivenessof succession planning. We will take particular care whenreviewing equity awards granted for the purposes of recruitment
or retention when such awards are not linked to meaningfulperformance targets.

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We encourage the inclusion of environmental and social
factors in performance bonus payments where they could havea material impact on shareholder returns. We also expect a
discussion of the process undertaken by the company to identify
such factors and an explanation as to why it considers thesefactors to be relevant.
Holding periods, vesting and malus/clawback policies
Bonus payments and long-term incentive schemes should be
structured to reward long-term growth in shareholder value andbe subject to performance-vesting conditions. We encouragecompanies to include deferred shares as a portion of short-termbonuses. Longer-term incentive plans should be fully sharebased, and vesting periods should extend from at least three
to five years or longer. We also encourage companies to require
longer-term holding periods post vesting. The compensation

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committee should maintain a malus authority to withhold all orpart of performance-based pay from executives before it has
vested in cases where it deems it appropriate. The compensationcommittee should also have clawback authority to recover sums
already paid out to executives. This might occur following asignificant restatement of accounts, where previously granted
awards were paid on the basis of inaccurate figures, or where
the long-term outcomes of a specific strategy result in significant
value destruction for shareholders.
Employee ownership
Widespread employee ownership can contribute positively toshareholder value, as it further aligns employees’ interests withthose of shareholders. Such devices should not, however, beinstituted as anti-takeover devices, and should be included withincompany-wide dilution limits.

Corporate Governance Guidelines (CGG)

5 Audit, risk and control
We recommend that the independent members of the audit
committee meet on a regular basis with the company’s auditors
and without company management. This may enable a better flowof information between auditors and the board.
Appointment of auditors
The auditors’ performance and appointment should be reviewed
periodically. Where the same firm remains as auditor for a periodof time, there should be a policy of regular rotation of the lead
audit partner. We believe that systematic rotation of audit firms isboth desirable and in the best interests of shareholders.
We expect audit quality to be the main consideration in theselection of the auditor and expect that shareholders should begiven the opportunity to vote on the appointment and payment ofauditors.
Auditor liability
We recognize the disproportionate risk that joint & several liability
may place upon audit firms. However, we will only consider
supporting arrangements to cap auditor liability in exceptional
circumstances (e.g., where the risk of a catastrophic anddisproportionate claim can be demonstrated).
Fees paid to a company’s auditors in addition to audit fees
Companies should disclose when auditors carry out consultancy
work in addition to auditing the company and the audit committee
should consider whether there is a risk that an auditor’s
impartiality may be jeopardized. The range, nature and tendering
process for any such non-audit work should be supervised by
the audit committee, whose responsibilities in this area should
be fully disclosed. Where substantial non-audit fees are paid formore than one year, we may not support the reappointment of
the auditor or the payment of auditor fees in its voting at AGMs.

Related-party transactions
Many companies are involved in material related-party
transactions, which represent a significant risk to shareholders.
This risk is mitigated in companies with fully independent
audit committees whose responsibility it is to ensure thatsuch transactions are conducted on the basis of arm’s-length
valuations. We strongly encourage companies to use suchcommittees for scrutiny, and to secure prior shareholder approval
for material related-party transactions.
In the circumstance of continued concerns, we recommend thateach company disclose any shareholdings that its controllingshareholders may have in other companies or investment
vehicles that have a material interest in the company.
Risk management
The board as a whole is responsible for defining a company’srisk tolerance relative to its strategy and operations—it is also
responsible for monitoring the company’s performance relative
to defined risks. Financial, operational, and reputational risks
that are relevant to the company’s business and performance
should be included in this oversight, including material ESG andethical risks.
Depending on the size and complexity of the company, astandalone risk management committee may be warranted.

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6 Shareholder rights
While the precise nature and scope of shareholder rights
vary across jurisdictions and many related aspects of our
expectations are touched upon in other parts of these guidelines,
a number merit direct mention:
Liaison with shareholders
Board and management teams should be ready, wherepracticable, to engage in dialogue with shareholders based onan understanding of shared objectives. They should also be
proactive in making sure important news is imparted, subject
to appropriate inside information procedures, and should react
helpfully to investor inquiries.
In investment meetings with shareholders, companies should be
prepared to address relevant corporate ESG issues.
Issuance of Shares
We respect a company’s right to issue shares to raise capital.
However, share issuance should be strictly limited to thatwhich is necessary to maintain business operations and drive
company strategy. We will not support requests to increaseauthorized share capital that exceed 50% of existing capital,
unless specific justification has been provided (e.g., tocomplete a strategically important acquisition or undertakea necessary stock split).
Pre-emption Rights
We believe that pre-emptive rights for existing shareholders are
essential. Shares may be issued for cash without pre-emptive
rights or for compensation purposes, subject to shareholder
approval. Companies should adhere to strict limits for issuing
new shares as a proportion of the issued share capital.
Furthermore, they should also be subject to flow rates, whereappropriate.
Share repurchases
We expect companies to repurchase shares in the market when
it is advantageous for the company and its shareholders.
Authority to repurchase shares should be subject toshareholder approval.

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Controlled companies and share classes with differential
voting rights
We favor a share structure that gives all shares equal voting
rights. We do not support the issue of shares with impaired orenhanced voting rights.
Where differential voting structures exist, this structure should betransparently disclosed to the market. In the case of controlled
companies, we will review any request to issue shares withenhanced voting rights to determine why these are necessaryand how they will reflect the interests of minority shareholders.
We support the principle of one share, one vote, and encouragecompanies to take steps to eliminate differential voting structures
over time or prevent their introduction. Where there are unequal
voting rights, we encourage clear and comprehensive disclosureof a timeline regarding the retirement of unequal voting structures(otherwise known as sunset provisions).
Voting caps
We oppose voting caps in principle and believe that all sharesshould be entitled to full voting rights irrespective of the holding
period. However, we recognize the widespread use of voting caps
in certain markets, and the benefits accruing to shareholders not
subject to a cap. Therefore, at a minimum, we expect companies
to clearly disclose any caps and encourage them not to introduce
new caps while phasing out existing caps over time.
Mergers and acquisitions, spin-offs and other corporate restructuring
We expect boards to conduct thorough due diligence prior to
pursuing any merger or acquisition and to maximize shareholder
value in any deal.
Where major transactions are not subject to shareholder
approval, companies should consider the views of their major
shareholders, subject to regulatory constraints and shareholders’policies concerning insiders.
We consider the ESG risk implications of any corporate activity as
part of the assessment of such activity, particularly in high-impact
industries. We also expect the board to evaluate any potential
ESG or ethical risks or liabilities of any business combination,
including supply chains.

Corporate Governance Guidelines (CGG)

Poison pills

Shareholder resolutions

We regard artificial devices to deter bids, known as poison
pills, as inappropriate and inefficient unless they are strictly
controlled and very limited in duration. We believe that any
control-enhancing mechanism or poison pill that entrenches
management and protects the company from market pressures
is not in the interests of shareholders.

We consider all shareholder resolutions that appear on the ballot
and vote in accordance with our view of the long-term economic
benefit to shareholders. On this basis we will typically support
requests to improve board accountability, executive pay practices,
ESG disclosure and climate change scenario analyses where
we agree with both the broader issue highlighted as well as theimplementation proposed. We also typically support shareholder
proposals asking companies to report on implementation ofenvironmental and social policies and assessments where there
is reason for concern that links to financially material risks that
could impact the performance of the company. We will review
company and outside data and information, assess peers forbenchmarking and consider the proponents’ and company’s
arguments in full.

Pension and other similar significant corporate liabilities
Companies should be aware of, and report to shareholders on,
significant liabilities such as those arising from unfunded orunder-funded pension commitments. The extent of the liability
should be reported, and the plans put in place to cover the deficit
should also be reported within a reasonable timeframe for action.
The principal assumptions used in calculating amounts should
form part of this disclosure. Other significant liabilities could
include specific operational or ESG risks that the company faces.
The company should provide some indication of how these risks
could result in “contingent liabilities.”

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Corporate Governance Guidelines (CGG)

7 Reporting
Companies should have meaningful and transparent disclosure
so that investors can obtain a clear understanding of all importantand relevant issues. The annual report should provide a full
review of the business model and strategy; key performanceindicators used to gauge how the company is progressing against
its objectives; principal (material) risks and any significant factors
affecting the company’s future performance, including significant
ESG or ethical issues; key achievements; and standards followed
during the accounting period.
In all markets, we favor reports that are:n Comprehensive, covering the strategic direction of thebusiness and all material issues, including any significant
changes in the regulatory context and key ESG issues;n Balanced, with even-handed treatment of both good and bad
aspects of a company;n Transparent, with narrative text that leverages plain
language, and accounting notes that provide investors witha full understanding of the circumstances underlying thereported figures;n Underpinned by Key Performance Indicators (KPIs) thatdrive business performance, are comparable over time,and are supported by detailed information on how they arecalculated;n Consistent and joined-up with other company reporting,including the compensation policy and corporate social
responsibility or sustainability reporting.
Directors
Adequate biographical information on the directors should
be provided for shareholders in advance of the AGM. Thisshould include information about directors’ qualifications
and experience, term of office, date of first appointment, levelof independence, board committee memberships and otherpersonal and professional commitments that may influence
the quality of their contribution and independence (e.g., otherdirectorships, family and social ties, and affiliations with relatedcompanies or organizations). For all newly appointed directors,
we encourage disclosure of qualifications, experiences andskills that are considered by the board to be of relevanceand importance to its oversight of company strategy. To thisend, we encourage disclosure of a clear and concise board
skills matrix in the proxy voting materials and annual report.

14

Nomination committee report
The committee should report annually on its activity and thereport should provide a detailed discussion of its process for
identifying and appointing executive and non-executive directors,
including the processes it employs to ensure board membershipreflects an appropriate diversity of perspectives, experiences,
gender and racial or ethnic representation as well as cultural
backgrounds. Where necessary, the report should include athorough discussion of the board’s view of the independenceof certain members. The report should also include a robust
description of the board evaluation process, cadence, andoutcomes (including strengths and opportunities identified).
Audit committee report
The audit committee should report on its conduct during theyear and, in particular, any specific matters of judgement relating
to the application of accounting principles or the scope of theaudit. It should also comment on the process for ensuring theindependence of the auditors and for evaluating the impact
of non-audit work. The audit committee report should include
a narrative description of any related-party transactions, withreference to how these might impact the interests of minority
shareholders. Any qualification of the audit statement and all
matters raised in the auditor’s report must be fully explained.
System of internal controls and risk management
If the audit committee’s remit includes risk management,
the audit committee report should also address the board’s
oversight of enterprise-wide risks. Either as part of the audit
committee report or a standalone report, the company should
explain the results of the board’s review of internal controls,
including any identified (or potential) weaknesses in internal
controls and how the board plans to respond to these.
Compensation report
We expect all companies to publish an annual compensation
report in line with international good governance standards. Good
compensation reporting outlines a company’s overall philosophy
and its policies and formulas for determining annual, short- andlong-term pay. We look for compensation reports to break down
fixed versus variable pay and to clearly align total pay packages
with long-term shareholder value. The compensation report
should clearly disclose specific long-term performance targets
and total potential pay-outs.

Corporate Governance Guidelines (CGG)

If short-term performance targets cannot be disclosed due
to commercial sensitivity, we expect retrospective disclosureof short- term targets and of actual performance against
these targets.
We recommend that all companies put the compensation reportto a shareholder vote and encourage compensation committee
members to actively consult their shareholders prior to the AGM.
Sustainability reporting
We encourage companies to report on any significant ESG or
ethical risks and opportunities in their annual reports including
the systems in place to manage these risks. This may besupported by more detailed disclosure in a separate corporatesocial responsibility or sustainability report.
Code of corporate governance
Companies should provide a full and clear statement of all
matters relating to the application of the provisions of therelevant national code of corporate governance. The way theprovisions are put into effect should be clearly discussed. Any
deviations should be supported by meaningful explanations.
Code of conduct
Companies should maintain a code of conduct reflecting
corporate values and promotion of ethical business practices.
Such codes should address business-critical compliance issues
including anti-corruption practices.
Reincorporation in a tax or governance haven
Irrespective of the potential benefits a smaller tax burden may
bring, we will typically vote against resolutions for a company
to reincorporate in a new legal jurisdiction that offers lower
legal and governance protections to shareholders. Aggressive

tax strategies, even if structured legally, can pose potentiallysignificant reputational and commercial risks for companies.
We expect boards to ensure the company’s approach to tax
policy is both prudent and sustainable. To that end, we therefore
expect companies to disclose how the board is providing suchoversight. Companies should provide a suitable amount of
information for investors to understand their tax practices andassociated risks.
Listings
Companies that are listed on an exchange should comply withthe rules and listing requirements of that exchange.
Shareholder resolutions and access to the proxy statement
Shareholder resolutions represent the exercise of a key
shareholder right and may encompass a wide range of issues.
We encourage companies to engage in constructive dialogue withshareholders and other key stakeholders. Where engagement
is unsuccessful, we support shareholders’ right to submit
a shareholder proposal for consideration by all investors. In
these instances, companies should behave respectfully bycommunicating promptly and fully with shareholders whilerefraining from obstructing the process. The board should provide
a full and reasoned response to any shareholder proposal on
the ballot. We consider all shareholder resolutions put forward
and vote in accordance with our understanding of the long-term
economic benefit to shareholders. We support shareholder
resolutions relating to the right to nominate or remove directors,
including those related to an advisory shareholder vote on pay.
We may incorporate into our decision whether a shareholder
resolution is binding in nature or advisory (non-binding) inapplying the above considerations.

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Corporate Governance Guidelines (CGG)

8 Social and environmental factors
Environmental and social factors can present serious risks tocorporations and their ability to generate shareholder returns.
A well-run company should, therefore, have formal systems toidentify, assess and manage significant risks associated withfinancially material environmental and social factors. Companies
should publicly disclose such factors on a regular basis anddetail any management-related strategies and targets.
Disclosure should cover both direct operations and, where
relevant, the policies applied to their supply chains. Companies
should make appropriate and integrated disclosures reflecting
touch points to their strategy, research and development,
capital expenditures, operational performance, and commercial
aspirations.
In general, we evaluate environmental and social proposals
based on the relevance of the issue to the company and thedesirability of the specific action requested in the proposals toadvance long-term shareholder value. We recognize that some
proposals may identify important company risks even if the
proposal is poorly constructed. In such cases, we encouragecompanies to identify, mitigate and report on their respective risk
management approach effectively.
Environmental and social management
Companies should determine how financially material
environmental and social risks and opportunities are
addressed via their core business strategy. As part of thisprocess, companies should proactively identify, assess andmanage those risks and opportunities, as well as implement
robust sustainability governance frameworks to promoteaccountability and ensure effective oversight. We expect
companies to align their disclosure of environmental and social
policies, management systems and performance according tointernationally accepted standards. We also expect companies toquantify impacts from environmental and social factors and set
targets to mitigate and manage material sustainability risks andimpacts.
We have set out our detailed thoughts for environmental
and social practices in stand-alone documents available on
our website.
We may withhold support from management resolutions should
we deem companies’ responses to involvement in significant
environmental or social controversies as insufficient, or where wehave concerns about recurrent weak practices by companies inhigh-impact industries.

3

https://www.fsb-tcfd.org/publications/final-recommendations-report/.

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We may vote in favor of shareholder resolutions seeking
improvements in reporting and/or management of environmental
or social practices where we have concerns, acting in thebest economic interest of our clients, or improvements areproportionate to the risks faced.
Climate change
We recognize that climate change and the global transition to alower-carbon economy present both risks and opportunities tobusinesses. We are supporters of both CDP (formerly, the Carbon
Disclosure Project) and the recommendations of the Taskforce
on Climate Related Financial Disclosures3 and expect to see
companies report climate risks and strategy against the proper
standards and frameworks. We also support company efforts
to implement net zero targets; however, the company should
disclose specifics as to how they will accomplish this.
Some companies may be exposed to business risks stemmingfrom the effects of climate change either directly via theirbusiness operations, regulations, changing consumer demandor through supply chains. Where these are financially material
risks, companies should describe how their business strategy
incorporates climate risk and ensure adequate disclosure.
Where companies in high-impact sectors—e.g., thoserequested to disclose to CDP Climate Change—fail to provide
investment-relevant climate disclosure or do not have a robust
climate change risk management strategy, we may not support
management resolutions, including the report and accounts orthe election of directors if we think this is in the best economic
interests of our clients.
Where there are matters of concern, we may support shareholder
resolutions calling on companies to improve their businessplanning and public disclosure in relation to climate change risks
and opportunities.
We will make use of investor tools such as the Climate
Action 100+ Net Zero Company Benchmark, the Transition
Pathway Initiative, our own proprietary net zero tool as well as
engagements we’ve conducted to identify companies that fail tofollow best practice.
Biodiversity
Loss of biodiversity degrades ecosystems which underpin the
Earth’s ability to provide regulating, provisioning, cultural andsupporting ecosystem benefits. For companies in sectors withhigh biodiversity impact that fail to provide appropriate disclosureCorporate Governance Guidelines (CGG)(e.g., CDP Water Security and/or Forests disclosures), we may
not support management resolutions if we think this is in thebest economic interests of our clients.
Sustainability and integrated reporting
A company’s recognition and management of financially material
environmental and social exposures and related disclosuresprovides shareholders with an additional lens through which toassess the quality, leadership, strategic focus, risk management
and operational standards of practice of the business.
Disclosure of significant environmental and social risk factors
should be included in the annual report. Certain high risk or highimpact operations that are of substantial interest to investors
and the public may require modular reporting alongside reportingthat aggregates all company activity. We recommend disclosurein line with internationally accepted standards of best practicewhich enhances our understanding of a company’s ability tocreate and sustain value in the short, medium and long term.
Audit of social and environmental management systems
We appreciate that auditing and assurance practices forenvironmental and social systems require further development;
nevertheless, we consider third-party auditing of sustainability
reports to be best practice. We encourage companies to movetowards third-party verification.
Labor practices and standards
Companies may incur significant risks because of theemployment practices of their own operations and those of their
suppliers and sub-contractors. Codes of conduct that address
such risks and include detailed and effective procedures for their
supply chain are usually in companies’ best interests.
Where there is cause for concern, we favor codes based oninternationally recognized standards (e.g., core conventions of
the International Labour Organization), independent monitoringor auditing of implementation, and reporting of aggregate
audit results. We look for regular, public reporting on code
implementation.
Human rights
Companies may incur extraordinary risks to their operations,staff, or reputation as a result of operating in conflict zones orin locations at risk of human rights abuses. Risks may also be
encountered via supply chains when primary productinputs are sourced from at-risk areas. Where there is cause forconcern, we support resolutions asking companies to develop
and implement policies and management systems addressing
human rights and security management. These policies shouldreflect internationally recognized standards (e.g., United Nations
Universal Declaration of Human Rights) and should apply tosuppliers and sub-contractors.

Severe human and labor rights issues often affect themost vulnerable communities and can represent a threat to
reputational and operational corporate performance. They arereferenced in various international standards and conventions
and are linked to existing4 or evolving5 regulations that issuers
may be subject to.
We believe that effective mitigation of these issues cancontribute to sustainable long-term value creation by thecompanies in which we choose to invest. At companies identified
as being most at risk with insufficient mitigation strategies, we
may not support management resolutions, including the reportand accounts or election of directors if we think this is in thebest economic interests of our clients.
Diversity and equal employment opportunity
The best interests of companies, as is maintaining a diverse
workforce. We support efforts to strengthen non-discrimination
policies, achieve diversity objectives and address glass ceilingsat all levels within organizations. We welcome disclosure of
specific diversity targets and reporting on performance against
these targets, as well as reporting on gender and ethnicity pay
gaps within companies and plans to address these. We will lookfor disclosure of how measures to increase diversity have been
applied and the management and oversight of these measures.
In an environment where many industries and companies arefacing shortages of skilled workers, thus increasing competition
for talent, it is advisable and appropriate for company policies
and practices to exceed legal requirements in order to attract andretain employees.
Political and charitable donations
Charitable and political donations should be consistent withthe company’s stated sustainability strategy. (See “Reporting”
above). We recommend that the board provide ultimate oversightfor political donations and related activity. Furthermore, we
believe that companies that undertake charitable giving shouldhave transparent policies and undertake charitable giving
programs with due regard for the interests of shareholders andkey stakeholders.
Environmental stewardship
Companies should determine how key environmental risks
and opportunities fit into their core business strategy. As partof this process, companies should identify, assess, and manage
their environmental impacts. This may include minimizing key
environmental impacts, reporting on environmental management
systems and performance, and discussing related financial
impacts. Areas of increasing business interest include energyuse, emissions, water, waste, and the utilization of natural
resources.

4

UK Modern Slavery Act, OECD Guidelines for Multinational Enterprises.

5

EU corporate mandatory human rights due diligence, Swiss mandatory human rights DD (focus weapons), German Supply Chain Code.

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Corporate Governance Guidelines (CGG)

9 Voting matters
Annual general meetings
Although we supported company efforts to hold virtual-only AGMs
during the initial stages of the COVID-19 pandemic, we encouragea return to physical annual meetings of the shareholders thatare supplemented with a robust and accessible virtual (or hybrid)
option. If the company decides to provide a hybrid meeting,shareholders joining virtually should be provided the same
treatment and transparency as those attending in-person.
Vote disclosure
We expect companies to disclose the voting results of theirgeneral meetings, both at the meeting and on their websites.
This should include a detailed breakdown of votes for andagainst, as well as abstentions.
In the spirit of transparency, we also make available to both
our institutional and retail fund customers, as well as to the
public, a comprehensive record of our voting by publishing all ourvotes and comments on our website.6 A summary of our voting
statistics can be found in our annual Stewardship report
Shareblocking
We believe that shareblocking—the practice of preventing sharesfrom being transferred for a fixed period prior to the vote at acompany meeting—discourages shareholder participation andshould be replaced with a record date. Where shareblocking
exists, we will follow client policy and may be prevented fromvoting because of concerns about failed trade settlements andextraordinary cost to clients.
Electronic voting and of use proxy advisory services
We typically exercise voting rights electronically. We currently voteusing ProxyExchange, the electronic voting platform provided by
Institutional Shareholder Services (ISS). We do not follow ISS
vote recommendations, except as provided for in our Conflictof Interest Policy or if instructed by clients. Instead, ISS assists
us though pre-populating our vote instructions in accordancewith our vote policies. Our Responsible Investment teamreviews a proportion of meetings based on an internal
prioritization model.
Position on abstentions
Our standard voting approach is to either vote for or against
resolutions where these options are available to shareholders.

6

See vote disclosure webpage.

18

However, there are cases where we consider abstaining tobe appropriate—for example, where company practices have
improved significantly but do not fully meet our expectations.
With respect to shareholder resolutions, we may abstain in cases
where we agree with the broader issue highlighted but do notagree with the way in which the resolution prescribes change.
Additional soliciting materials
If we become aware that an issuer has filed additional soliciting
materials prior to a proxy vote submission deadline, then we
endeavor to review and reflect those in the application of ourvoting policy where: (a) the submission is published at least fivedays prior to our earliest client vote cut-off; and (b) the enclosed
information is considered to be material towards impacting our
voting position.
Stocklending
We observe that stock lending is a widespread market practice
involving the sale and contractually pre-agreed repurchase ofa stock. We believe that stock lending is an important factor
in preserving the liquidity of markets and in facilitating hedging
strategies; it can also provide investors with a significant
additional return on their investments as the sale repurchasetransaction may include a profit margin. Importantly, however,if the term of the instrument coincides with an annual or
extraordinary general meeting, the transfer of the voting right
impairs the ability of the underlying shareowner to exercise theirvoting rights. In rare instances, this has led to abuse, where
borrowers have deliberately entered into transactions to sway theoutcome of a shareholder vote without any intention of owning
the stock long-term. We consider the balance struck between
stock lending and voting to be a matter for individual decisionmaking by clients.
Record dates
We recommend that a record date be set a maximum of fiveworking days prior to AGMs for custodians and registrars toclearly establish those shareholders eligible to vote. This will
give time for all relevant formalities to be completed and serves
the same purpose as shareblocking without the disruptions
noted above.

Corporate Governance Guidelines (CGG)

Voting systems

Any other businessAll companies should conduct voting by poll, rather than relying
on a show of hands.

We expect to vote on resolutions where the content has
been made clear to shareholders and is in the interestsof the company and its shareholders. Where a resolution
invites shareholders to vote on “any other business,” we will
systematically vote against.

We believe that shareholders have the right to appoint any
reasonable person as proxy to vote their shares, either in person
or electronically.
We encourage the introduction of electronic voting systems thatare accurate and provide an effective audit trail of votes cast.
Bundled resolutions
Resolutions put to company meetings should cover single
issues, or issues that are clearly interdependent. Any otherpractice potentially reduces the value of votes and canlead to opposition to otherwise acceptable proposals. We will
normally oppose resolutions that contain such inappropriately
bundled provisions.

Political and charitable donations
We welcome the opportunity to vote on company donations
if material. With respect to donations to political parties or toorganizations closely associated with political parties, we believe
the board is best positioned to oversee the appropriateness ofsuch spending and should review as often as is necessary toensure congruency with both corporate strategy and values.
Amendments to Articles
We are generally unsupportive of amendments to the articles ofincorporation which limits the liability of company officers.

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