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Engagement
Outlook2024 Thematic Outlooks andEngagement Projects

Outlook – 2024 Engagement projects and priority issuersContents
Click the links below to learn more about our
2024 Outlook.
> Our engagement themes4> Climate change

6> Environmental stewardship8> Labour standards

10> Human rights

12> Public health14> Business conduct

16> Corporate governance18> 2024 Engagement projects

202Outlook – 2024 Engagement projects and priority issuers

Introduction
At Columbia Threadneedle Investments, we view
engagement and proxy voting as powerful levers that canhelp create investor value.
Our research intense approach ensures we have a deep understandingof the wide range of Environmental Social Governance (ESG) risks andopportunities across the complex, intertwined global landscape.
Our active ownership team research issues anticipated to be drivers oflong-term operating and financial performance of investments. This reportprovides background on the seven high-level themes that our engagement
programme is structured around and highlights the key issues that
underpin them.
We also detail thematic engagement projects which frame specific ESG
issues that our active ownership analysts will use to focus engagement
activities in 2024. We publish this report alongside our Engagement Review,which summarises our progress on engagement projects and priority
issuers of 2023.

Claudia Wearmouth
Managing Director,
Global Head of Responsible Investment3Outlook – 2024 Engagement projects and priority issuers

Seven themesof engagement
Our engagement programme is structured around seven high-level
themes encompassing the ESG issues of most relevance to investors.
Underlying each theme is a range of more granular sub themes.

Our preferred approach to conducting engagement
is to use constructive, confidential dialogue, typicallyinteracting one-to-one with issuers and building a
relationship of trust over time as long-term investors.
4Outlook – 2024 Engagement projects and priority issuers

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Environment
Climate change■ Climate change lobbying■ Climate finance■ Emissions management■ Energy transition■ Just Transition■ Net zero strategy■ Resilience and adaptation

Governance
Environmental
stewardship■ Environmental finance■ Environmental supply chain
management■ Natural resources – Biodiversity■ Natural resources – Lands■ Natural resources – Oceans■ Natural resources – Water■ Pollution impacts■ Product sustainability■ Sustainable waste management

Corporate governanceBusiness conduct■ Audit■ Board diversity■ Board effectiveness■ Board independence■ Capital allocation■ Capital structure andshareholder rights■ ESG oversight■ Nomination and succession
planning■ Remuneration■ Risk management, internal
controls and due diligence■ Strategy and execution■ Sustainability innovation■ Access to finance■ Anti-competitve practices■ Bribery, corruption and financial
crime■ Data privacy and security■ Grievence and whistleblowing
systems■ Lobbying■ Other legal compliance■ Responsible marketing and
sales
■ Tax

SocialHuman rights

Labour standards

Public health■ Community relations■ Grievence mechanisms andremediation■ High risk areas■ Human rights due diligence■ Indigenous peoples’ rights■ Diversity and discrimination■ Fair wage
■ Forced labour and child labour■ Freedom of association andcollective bargaining■ Human capital management■ Occupational health and safety■ Social supply chain management■ Access to healthcare■ Food security■ Health security■ Nutrition■ Product quality and safety

Transparency & disclosure remains a core engagement element across E, S and G
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Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Climate Change

Our engagement summary
2023 saw many of the predictions of climate scientists turninto reality, as the combined effects of climate change andthe El Niño conditions resulted in extremes of heat across theworld. Summer 2023 was the hottest on record by a significant
margin,3 with heatwaves sweeping across continents anddeadly wildfires hitting countries including Canada and Greece.
2023 was the hottest year on record, with more likely to follow
in 2024 as El Niño conditions persist – 2024 could even be
the first when the world hits the totemic 1.5 degrees above
pre-industrial levels.4
The rise in global greenhouse gas emissions continued, andalready in 2022 reached a new record of 57.4 gigatons CO2e,
with all sectors excluding transportation now exceeding preCovid levels;5 2023 emissions are likely to be higher still, likely
rising to around 59 gigatonnes.6
However, an inflection point may be on the horizon. Almost all
countries in the northern hemisphere, as well as Australia and

New Zealand, are now on a declining emissions pathway7 –including China, where emissions look likely to enter structural
decline in 2024 following the country’s vast investment in
low-carbon energy.8 The US is also on a downward trajectory,
with key factors including the sharp decline in coal-based power
generation and improvements in energy efficiency.9 And for the
first time ever, the final text of the COP climate negotiations
most recently held in Dubai in December 2023 referenced theneed to transition away from fossil fuels.
Against this backdrop, our engagement in 2024 will continue
to focus on the practical realities of implementing the energy
transition and global decarbonisation.

Net Zero Strategy
Our core aspirations for issuers remain unchanged, and arealigned to the Climate Action 100+ framework and our own
proprietary net zero model:• Ambition to cut emissions to net zero by 2050 at the latest,with interim targets aligned to science-based trajectories• A credible business strategy to implement this, includingalignment of capital expenditure

Key facts

1.46°C• Address the social aspects of transition, using a Just
Transition approach

The increase in the average global temperature in 2023
vs pre-industrial levels1• Risk analysis and disclosure in line with therecommendations of the Task Force on Climate-related
Financial Disclosures

24 gigatonnes CO2e

• Ensure lobbying and public policy practices are consistent
with these goals

The gap between 2030 global emissions based on
current government policies, and those under a 1.5°C
consistent pathway2

6• A strong governance framework to oversee climate strategy,
and a link to executive remuneration

In our own approach we seek to understand the technical,
financial and regulatory obstacles to decarbonising businessstrategies – particularly in ‘hard to abate’ sectors such as
steel, cement and real estate – and work collaboratively withcompanies and across sectors to find solutions.

Outlook – 2024 Engagement projects and priority issuers

In 2023 and moving into 2024, much of our engagement
focused on the quality of transition strategies. Following
the success of Climate Action 100+ and other investor
engagement, and active encouragement by certain
governments, we find that many companies have targets
in place but that implementation is often lacking. We seek
concrete plans that include interim milestones, and clearalignment of capital expenditure.
One theme emerging from our 2023 engagement has been
the strain that the mass shift towards the electrification oftransportation and many industrial processes will put on theelectricity sector and related supply chains, particularly in
relation to batteries. A transition pathway in line with a ‘well
below 2 degree’ future would see demand for critical minerals
quadrupling. This is one of many potential bottlenecks we willseek to explore further in 2024.

Resilience and adaptation
Another consistent theme we have identified from our 2023
engagement is a lack of preparedness on physical climate
risk, where strategies are in general less developed than ontransition risk. Our engagement discussions revealed a wider
range of impacts than perhaps typically recognised by investors.
As well as the more obvious risks posed by flood or drought
to the operation of physical assets, we also found companies
having to make major adaptations to their working practices
to safeguard worker safety in excessive heat, and facing
significant supply chain uncertainties due to unpredictable
weather assets.
In 2024 we will focus on water risk management as a key
conduit of climate risk. We plan to discuss with companies in
the agricultural and mining sectors to better understand how
systematically they are assessing and mitigating current andfuture water risks. This work will link closely with our wider workon biodiversity and food systems.

Managing physical climate risk is material to investors and will only become
more so as we continue to experience the accelerated (and likely irreversible)
impacts of climate change.

Met Office and University of East Anglia 2023: The warmest year on record globally
UN Environment Programme Emissions Gap Report
3
NASA, NASA Announces Summer 2023 Hottest on Record – Climate Change: Vital Signs of the Planet
4
UK Met Office 2024: First chance of 1.5°C year
5
UN Environment Programme Emissions Gap Report
6
World Emissions Clock
7
World Economic Forum, citing Brookings Future Development Have we reached peak greenhouse gas emissions?
8
Carbon Brief Analysis: China’s emissions set to fall in 2024 after record growth in clean energy
9
US Energy Information Administration Narrative 2023
1
2

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Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Environmental
stewardship

Our engagement summary
Today the rate that species are going extinct is between 100
and 1,000 times the rate that we have historically experienced,
and global wildlife populations have plummeted by 69% on
average since 1970.10 Further, 55% of the world’s grossdomestic product (GDP) – equivalent to c$58 trillion – isexposed to material nature risk. And with the accelerating rate
at which natural resources and ecosystem services are being
eroded, economies are further placed at risk as businesses
grow and economies develop. There is a strong case forcorporates to identify, assess and manage their material
impacts and dependencies on nature.

Nature-related regulation
In 2023 we saw a step up in nature-related regulation withseveral key pieces of regulation progressing in the European
Union, including the EU Deforestation Regulation, the EU
Nature Restoration Law and the EU Packaging Regulation.
This strengthening of the European regulatory environment isa key tailwind that supports the success of our engagements
focused in this area. With the European Parliament’s 2024
election looming and the current phase of the European Green
Deal coming to a close, 2024 will be a key year for determining
how the EU can continue to play a leading global role onenvironmental regulation.
In contrast, there has been little progress in the UK on
environmental regulation over the past year, however the
UK government has launched a Biodiversity Net Gainrequirement for all new housing, commercial and infrastructuredevelopments which comes into effect in January 2024. 2024
is also an election year in the UK – post election, we believe
increased political stability should aid the UK in achieving
greater clarity on environmental policy.

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On the other side of the Atlantic, ‘forever chemicals’ or PFAS
(per- and polyfluoroalkyl substances) have been in the spotlightfor US legislators in 2023. These chemicals repel water, oiland grease, are used in hundreds of everyday products fromdental floss to cookware to firefighting foams, have been linked
to a host of health conditions and persist in the environment
for many years. 2023 saw the US government enact its firstever restrictions on PFAS, and multinational conglomerate 3M
settled a water pollution suit with US municipalities for $10bn.
We expect more regulation and litigation on PFAS in 2024 inboth the US and EU. In 2024 we also expect to see an uptick
in global action on nature, as revised and updated National
Biodiversity Strategies and Action Plans (NBSAPs) are due tobe released by UN biodiversity conference COP 16 which will beheld towards the end of 2024 in Colombia.
We recognise the importance of public policy engagement
to address systemic issues. Deforestation is a key focus forus, and we are members of the Investor Policy Dialogue on
Deforestation (IPDD), focusing on engagement with lawmakers
and regulators in Brazil and Indonesia. In 2023 we took part inan IPDD delegation to Brazil to engage the new Lula government
on its approach to halting deforestation, and advised the Ministryof Finance on structuring Brazil’s first sustainable debt issuance.
In 2024 we will continue to focus on Brazil, but will augment
this with an enhanced focus on engaging with the UK, EU and
US on their respective approaches to deforestation. Moving
into 2024 we plan to deepen our focus on corporate readinessfor the EU Deforestation Regulation, particularly around thetraceability and geolocation requirements which some issuers
are finding particularly challenging. We plan to work more closelywith our NGO partners including Rainforest Foundation Norway
and Zoological Society of London to focus our engagement on
sectors with growing deforestation footprints, such as nickel
mining in Indonesia and natural rubber production.

Outlook – 2024 Engagement projects and priority issuers

Investor initiatives
We have been members of the Taskforce on Nature-related
Financial Disclosures Forum for the past two years, providing
detailed feedback on draft versions of the framework, andwere encouraged by the release of the final recommendationsin 2024. We will be working to further embed therecommendations in our research approach internally in 2024
and will also use the recommendations as a key component of
our engagement activity. In our best practice framework that wepublished in 2023, we outlined our aspirations for companies
to identify and assess environmental impacts along the value
chain and to develop strategies to address and measure theeffectiveness of their interventions. We believe that companies
also need to assess the resilience of the natural resources thatthey depend on to reduce disruptions in business operations
and supply chains. Addressing degradation of ecosystems is
also key to support net zero commitments in sectors with large
exposure to land and sea use.
Building on lessons from engagement in 2023 when we
conducted 363 engagements with 260 issuers on nature
issues, we will continue dialogue with companies in highimpact industries such as food and beverages, household andpersonal products, extractives, chemicals, and transportation.
We are developing sector-specific guidance on the mostmaterial nature-related issues for each sector, which we intend
to publish later in the year. However, we believe that investors
will only get so far by acting individually and are conscious of
the need to push forward the investment industry to act onnature in a consistent manner. For that reason, we have been

10
11part of the Lead Investor Group setting up the Nature Action
10011 collaborative engagement initiative for the past two years.
Nature Action 100 is a global investor engagement initiative
mobilizing institutional investors to establish a common highlevel agenda for engagements and a clear set of aspirations todrive greater corporate ambition and action to stem nature andbiodiversity loss. The initiative will engage with 100 companies
in key sectors that are deemed to be systemically importantin reversing nature and biodiversity loss by 2030. We weredelighted to see Nature Action 100 formally launch at New
York Climate week in September 2023, and the initiative has
already accrued more than 200 institutional investor members
representing over $27 trillion in assets under management.
We continue to sit on the steering group and in the technicaladvisory group of the initiative and will participate directly inengagements with five companies which will begin in 2024.

We define engagement as having
constructive dialogue with issuers on a
range of risks including those linked to
ESG factors that could have a material
negative impact on their businesses
and, where necessary, encouraging
improvement in management practices.

World Wide Fund For Nature, Living planet report 2022
Nature action 100 global investor engagement initiative9

Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Labour standards
Our engagement summary
We view labour standards as a component of human rights.
Definitions of labour standards by the International Labour
Organization include freedom of association and collective
bargaining, elimination of forced and child labour, and provisionof fair wages. We believe that properly managing labour
standards can support companies in retaining their social
licence to operate, ensure continuity in business operations
and supply chains, avoid legal and regulatory fines, enhance
employee productivity and retention, and maintain customer
loyalty. We see these issues commanding more attention
because of macro trends including the realignment of global
supply chains, decarbonisation, and increased regulatory
attention to corporate due diligence.
A key development during the year was the European Union’s
agreement on the Corporate Sustainability Due Diligence
Directive which sets mandatory requirements for due diligence ofhuman rights, including labour rights, and environmental risks.12
The Directive is the latest example of increased regulatory
pressure for companies to effectively assess, mitigate, andremedy risks of labour rights violations in their value chains.

Continued focus on effective due diligence
The Directive is just the latest push for investors to look closely at
how portfolio companies are addressing social risks in their value
chains. During the year we have conducted internal trainings
for our investment teams, published a Viewpoint discussing
effective supply chain due diligence,13 and conducted public
webinars on effective supply chain due diligence to highlight risks
and exemplify good practice. Between 2022 and 2023, the U.S.
saw a staggering 44% increase in child labour cases, cited in
the press as possibly due to labour shortages and the fraught
situation for migrants.14 Recent high-profile cases show again that
recruitment and labour provision require greater attention.15 The
service provider PSSI was found to have employed children as
in-house cleaners at JBS and Tyson processing sites. Subsequentengagement with JBS explored moving the cleaning operation inhouse, perhaps lending greater weight to the non-financial costs

10of outsourcing. Responding to cases of child labour at a U.S.based supplier, PepsiCo worked to mitigate recruitment risk andintegrate such considerations into procurement practices.
We continued our participation in collaborative engagements
focusing on sectors at high risk of modern slavery and poor
working conditions – the Find it, Fix it, Prevent it16 initiative focusedon modern slavery risk in the hospitality and construction sectors,
while FAIRR’s Working Conditions collaborative engagement17
engages meat producers on improving social dialogue, working
conditions, and health and safety.
During 2023, UK food companies continued to face risks
relating to migrant workers recruited for agricultural work
suffering debt bondage. Engagement with Tesco and Marks &Spencer revolved around additional scrutiny of labour providers
and farms with good examples arising of industry collaborations
on audits and the implementation of whistle-blowing systems
to identify exploitation. The technology and automotive sectors
both rely on minerals like cobalt for batteries, exposing themto risks of exploitative and unsafe working conditions at themining stage. Our engagements with Samsung and Tesla have
explored approaches to increase transparency of sourcing andcollaboration with local and industry organisations to improve
working conditions.

Freedom of association and collective bargaining
Worker organisation is a fundamental right and is shown toincrease safeguards against exploitation and unsafe working
conditions. The trend that we noted in 2022 of increased union
activity in the US continued through 2023, with public opinion
also increasingly positive towards organised labour.18 2023 also
saw increased investor support for shareholder resolutions
seeking to ensure employee rights to freely organise andbargain collectively.19 Our engagement with Starbucks
intensified before the AGM and while we felt the dialogue wasconstructive and positive, we supported a resolution seeking
an independent review of its approach to unionisation attempts.
On living wages, we will continue to engage companies on
wage-setting processes and dialogue with the workforce.

Outlook – 2024 Engagement projects and priority issuers

We continued our collaboration in the 30% Club, engaging
companies on board and management to improve gender
diversity. We engaged Xiaomi Corp on its process of improving
board gender diversity to prepare for upcoming Hong Kong
Stock Exchange listing requirements of at least one female
director by December 2024. We were encouraged by the
progress displayed by Verizon in publishing the results of its
first racial equity audit and its plans for further disclosuresonce the SEC provides additional guidance. In engagement with
Cranswick, we discovered how semi-automation of certain work
processes in meat processing allowed for increased gender
diversity by reducing the physical strength required.

Workforce data remains a challenge
Structured reporting is necessary for investors to effectively
assess company and portfolio risks and performance. However,workforce data still lags environmental disclosure. Platforms
such as the Workforce Disclosure Initiative20 and World
Benchmarking Alliance Social Transformation21 can play animportant part and we continue to engage across sectors toencourage more structured disclosure on workforce mattersand align with public frameworks.

Looking ahead
In 2024 we expect to maintain a strong focus on labour
standards. Emerging regulations like the EU CSDDD (corporate
sustainability due diligence directive) and ongoing attention
from stakeholders is likely to push companies to become more

stringent in due diligence processes. We also expect theseregulations will lead to increased transparency of supply chain
working conditions. As cases referenced above demonstrate,
no value chain should be considered safe from forced labour.
Our engagement will focus on how companies adjust theirdue diligence processes to more clearly prioritise monitoringand interventions to address risks, and how oversight andintegration into purchasing practices are considered to leverage
influence.22
Workers in commodity supply chains are often directly exposed
to weather conditions. 2023 was the hottest year on record andhighlighted how extreme temperatures can impact value chainsand put workers at risk.23 As we continue to engage on physicalrisk, we will put more attention to how companies include
worker health and safety in such assessments.
We continue to experience an inflationary situation, increasing
the cost of living and hurting low-income workers in particular.
During 2023, we saw companies respond with in-year
pay increases and other means of support. While suchinterventions show an attention to workforce needs, we believe
investors would be helped by increased transparency andseek to engage on how wage-setting processes ensure that
employees receive a living wage. Similarly, we will continue
to engage companies on providing structured reporting of
workforce matters to facilitate investor understanding ofstrategy and outcomes, including supporting platforms like theWorkforce Disclosure Initiative.

European Commission (europa.eu), Corporate sustainability due diligence
Columbia Threadneedle Investment ESG Viewpoint, What makes supply chain due diligence effective?
14
CNN Business, Illegal child labor is on the rise in a tight job market
15
Harvard Law School Human Rights Program, The Resurgence of Child Labor and the Rights of the Child in the United States; The New York Times, Alone and Exploited, Migrant Children Work Brutal Jobs
Across the U.S.
16
CCLA, Find it, Fix it, Prevent it annual report
17
FAIRR, Working Conditions Engagement
18
Gallup, More in U.S. See Unions Strengthening and Want It That Way
19
Harvard Law School Forum on Corporate Governance, Which ESG proposals won the favor of investors?
20
Share Action, Workforce Disclosure Initiative
21
World Benchmarking Alliance, Social Transformation Framework
22
Columbia Threadneedle Investments ESG Viewpoint, what makes supply chain due diligence effective?
23
European Environment Agency (europa.eu), Heat and cold — extreme heat — Companies must help workers during extreme heat
12
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Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Human rights

Our engagement summary
The concept of human rights that are universally protectedrights that apply to everyone was established in the aftermathof World War 2. These rights are enshrined in a host ofinternational standards, and the Universal Declaration of
Human Rights (UDHR) highlights the interconnectedness withlabour standards and therefore the relevance to business.
In this regard, the rights to fair wages, freedom of associationand decent working conditions are acknowledged alongside
the right to health, liberty, privacy, freedom of slavery anddiscrimination. A failure by companies to respect human rights
in their operations, workforce, supply chains, and through the
products and services they provide can expose the business
to operational, financial and reputational risk. A foundationof our stewardship work on human rights is the expectationthat companies should conduct appropriate due diligenceto understand and mitigate adverse impacts on people andto underpin more stable and resilient operations, a stronger
social license to operate, and to promote better stakeholder
relationships. This can be particularly important when operatingin regions subject to conflict or state regimes of oppression.
We also recognise the need for responsible exit strategies
and the need for business to understand the status of any
significant legal/contractual obligations that may complicate
any exit.
Human rights issues span a wide spectrum across different
sectors and often intersect with other ESG topics that ourengagement programme focuses on, including businessconduct and ethics, labour standards, racial justice, accessto health and nutrition, indigenous rights and data privacy. We
are seeing increasing acknowledgement of the link between
environmental and social concerns, specifically, the impact
climate change can have in terms of physical risk and thedisproportionate impact this can have on people in the global
south. Further, the negative effects on operational resilience

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from lost productivity – related to absenteeism, reduced working
hours, work stoppages or delays, and financially material costof investment in adaptation strategies such as flood defences
and cooling systems are also increasingly recognised. We
continue to highlight the challenges faced by companies linked
to the appropriate use of personal data, while on the R&D endof the spectrum, concepts such as bias and discrimination inprogram decision making are still key concerns. More recently,
the human rights risks associated with generative AI havecome to the fore, where western language and cultural bias
could proliferate stereotypes, inflaming tensions between
various groups. Companies who actively engage with affectedgroups and stakeholders, providing access to remedy, appeal
mechanisms and avenues for those affected to seek redress
are less likely to face scrutiny and backlash over product andservice efficacy.
In our stewardship we make reference to the widely acceptedframework of the UN Guiding Principles for Business andHuman Rights (UNGPs) which contends that it is not sufficientfor companies to assess human rights risks in the context ofwhat material impact it could have on their business; rather,
they must also identify the most salient and severe risks topeople. The UNGPs provide a clear framework for companies
to embed respect for human rights into their operations,regardless of what sector or region they operate in. In line withthese principles, we ask companies to:• Have a robust governance of human rights in place, including
a policy commitment adhering to international standards,
formal management responsibilities for human rights andboard oversight• Have a due diligence process in place to identify salient
human rights issues and assess severe impacts• Engage with stakeholders, including those in their extended
supply chain; here effective grievance mechanisms are key

Outlook – 2024 Engagement projects and priority issuers

Investors must continue to perform their own due diligenceto effectively manage risk, avoid financial and reputational
losses and to address and prevent adverse impacts to people
and the planet through their investment portfolios. Our own
work over the years has allowed us to become increasingly
adept at identifying human rights and labour standards risks
across our portfolios. We are taking a top-down approach toscreening for elevated risk utilising disclosure, normative andcontroversy-based indicators coupled with traditional companyby-company analysis and engagement to allow for a more
informed view and better integration into fundamental analysis.
To ensure investee companies are prepared for regulatory
requirements and investor needs, we will continue to engage on
the implementation of robust HRDD, the provision of better dataon adverse social impacts and how companies aim to prevent,mitigate and remediate them.

Human rights due diligence and legislation• Have a process in place to assess the effectiveness of
mitigation programs, track actions and performance• Enable effective remedy if people are harmed• Provide transparent and consistent disclosure throughout
The UNGPs assert that all corporations have a responsibility
to respect human rights and are required to undertake humanrights due diligence (HRDD) in order to identify, prevent,mitigate and account for how they address adverse humanrights impacts. Voluntary standards have formed a basis onwhich to build due diligence approaches but it is the global
convergence toward supply chain due diligence legislation thathas really sparked change in our view. In 2024 and beyond
we are likely to see an increase in companies facing scrutiny
and allegation of non-compliance, likely resulting in financial
penalties. One source of research for us in prioritising ourhuman rights engagement is the World Benchmarking
Alliance’s Corporate Human Rights Benchmark (CHRB), which
provides an assessment of the implementation of robust
human rights due diligence measures as set out by the UNGPs
for the range of companies in scope. The benchmark tracks
progress from one assessment period to the next since its
inception in 2017, and this helps inform our focus. In themost recent assessment clear progress has been notedwith a reduction in the number of companies scoring zero on
key human rights indicators, but we have found companies
generally need to do more to embed and evidence theeffectiveness of their approach, particularly in light of the new
regulatory demands in some regions. We are sympathetic to
the CHRB view that the pace of change on fundamental aspectsof respecting human rights remains too slow. In our view,mandatory HRDD is of material benefit to businesses, investors
and broader economic resilience, creating consistency andefficiency across jurisdictions, and is a necessary component
for investors in order to fulfil our own HRDD obligations.

In the past few years, there has been an increasein national laws, requiring businesses to undertake
supply chain due diligence and to mitigate humanrights risks, most of which have both domestic
and foreign impacts. Businesses have long
been encouraged to take responsibility for theenvironmental and social impacts of their operations
on both people and the planet, this includes into
the extended supply chain. However, approaches
have broadly been voluntary and do not adequately
mitigate negative externalities experienced byworkers in multi-tiered value chains. The table below
highlights 12 key pieces of legislation that all havethe potential to increase the financial and operational
materiality of a lack of action on human rights risks.
This is further incentive for businesses and investors
to implement appropriate due diligence frameworks.

Key legislation:• Corporate Sustainability Reporting Directive• EU Commission’s Corporate Supply Chain Due Diligence
Directive• France’s Corporate Duty of Vigilance Law• Germany’s Supply Chain Due Diligence Law• Norway’s Transparency Act• Netherland’s Due Diligence Legislation – the Responsible
Business Conduct• Austrian Supply Chain Act• UK Modern Slavery Act• Canada Forced Labor Bill (BILL S-211)• Uyghur Forced Labor Prevention Act• Belgian Due Diligence Law proposal• Australia’s Modern Slavery Act

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Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Public health

Our engagement summary
The COVID-19 pandemic provided a stark reminder of the
impact public health issues can have on the global economy,
the effective functioning of society, and the fortunes ofindividual companies. Healthy economies depend on healthypeople. The steady gains in life expectancy and average
population health made over decades have been stallingand eroding in many countries due to a confluence of factors
including a rising tide of lifestyle related diseases such as
cardiovascular conditions and diabetes. These trends that havepreviously been associated with high income countries are now
also sharply increasing in low-and-middle-income countries.
In many economies ageing demographics, labour shortages
and cost inflation are putting additional pressure on
healthcare systems.
2023 brought perhaps the most significant development inaddressing the seemingly intractable obesity epidemic for many
years with the arrival of the appetite suppressant drugs forchronic weight management. Already blockbusters for the drug
companies, these treatments have changed the conversation
on obesity and are likely to have wider impacts on not only
the healthcare industry but potentially food and beverage
production, air transport, insurance and retail. Addressing
obesity matters not only for the quality of life of individuals
affected, but also has an enormous economic impact in terms
of productivity and direct healthcare costs. The Food andAgriculture Organisation of the United Nations (FAO) estimatedthat healthcare costs specifically related to diets will reach$1.3 trillion per year in 2030.
Beyond social factors, environmental issues such as air andwater pollution, nature loss and the wide-ranging impacts ofclimate change on temperatures and food security are further
exacerbating the headwinds to improving public health.

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Much of the responsibility for tackling these public healthchallenges lies with governments and with individuals, but thecorporate sector also exerts a significant influence on what we
consume, the conditions we work in and the environment welive in. As public health becomes an ever more critical issue
we need to take into account how shifting regulation, workforce
expectations and consumer choices are likely to impact
investment risk and opportunity. We engage companies in thehealthcare sector and beyond to better understand their exposureand strategic decision-making around these trends, and toencourage a responsible approach to impacting public health.

Nutrition
Nutrition has been an engagement topic for us for several
years. Diets naturally play a very important role in theprevalence of obesity, and we believe investment value can befound in companies driving growth through facilitating the shift
to more health-conscious diets and healthier lifestyles. We
are engaging food companies on their strategies for alignmentof product portfolios with healthier eating trends. We areencouraging companies to be transparent and report against
government-endorsed Nutrient-Profiling Models which enables
investors and other stakeholders to compare and monitor thenutritional profiles of product portfolios. In the years to come,we expect more scrutiny in terms of legislation and consumer
demand and therefore expect the food and beverage sector
to set ambitious long-term targets on healthy and affordable
products to future-proof their business. We are seeing action
toward increased regulation of unhealthy products, such as
clearer labelling of nutritional value, the restriction of promotionof unhealthy foods to children and sugar taxes. We have also
seen more debate and research emerging about the potential
impact of ultra-processed foods on health and expect more
focus on this in the market this year.

Outlook – 2024 Engagement projects and priority issuers

Access to healthcare
For companies providing products and services into thehealthcare sector, expectations of fair and equitable pricing,access strategies, health equity, and working with healthcare
systems on capacity building are perennially in focus in politics
and the media. We are engaging the healthcare industry on
an ongoing basis on efforts to maintain and broaden accessto their products, and to work constructively with patientsand payors. We believe in the long-term opportunities fromclear strategic thinking on access. In 2024 we are also
extending more of our dialogue on access to the generic drug
manufacturers.
An additional barrier to access highlighted by the COVID-19
vaccine development was the issue of trust in clinical trials.
Upcoming regulatory requirements will push the industry toinclude diversity planning in their trial protocols or justify why
this is not necessary, and we are engaging pharmaceuticalcompanies and contract research organisations (CROs) on theirapproaches. Improving trial diversity is not straightforward andissues such as trust and health literacy impact attraction andretention rates for clinical trial participants. Companies willneed to pull different levers over time to gradually effect thechanges needed.

Health security
Scientific advances have greatly enhanced our ability toovercome public health challenges, but certain global trends
are also eroding our health security.

24
25

Antimicrobial resistance (AMR) remains the ‘silent pandemic’with deaths from antibiotic resistant infections projected toreach 10 million annually by 205024. We will continue to engage
protein producers, restaurants and animal health companies on
stewardship of antibiotics in livestock production which has asignificant impact on accelerating resistance.
The World Health Organization considers climate change
to be the number one threat to global health and we areconsidering how to best factor this into our long-term
stewardship. If global mean temperatures continue to rise justunder 2 degrees, annual heat-related deaths are projected toincrease by 370% by 2050. Heat will have a particular adverse
impact on workforce productivity in labour-intensive sectors
like agriculture, construction, manufacturing, and services,
as showcased by a 2023 Lancet Study.25 Our vulnerability
to infectious diseases is also likely to increase due to aconfluence of factors, including urban population growth,
the intensification of livestock farming, climate change, anddeforestation. The physical climate risk to healthcare systems
is also increasingly acknowledged. Floods, hurricanes,
heatwaves, wildfires, tropical storms can significantly impact
the functioning of healthcare systems, patient care, and healthinsurance. It goes without saying that any health crisis presents
opportunities for different healthcare companies and the sector
will have a unique role to play in addressing the health impactsof climate change. We will continue to engage healthcarecompanies on how they assess these risks and opportunities
and target product development.

United Nations, Antimicrobial Resistance (AMR) review
The Lancet, The 2023 report of the Lancet Countdown on health and climate change: the imperative for a health-centred response in a world facing irreversible harms

15Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Business conduct

Our engagement summary
Businesses do not operate independently from the rest ofsociety; its stakeholders are either those who live in thatsociety, the institutions that sustain it, or the ecosystem inwhich it exists. Companies are often uniquely positioned toadvance societal progress and stability through the products
and services they produce, but how they do so can also hinder
it. Our engagement focuses on the latter, whether caused by
the actions of employees, or the collective behaviour from a
corporation itself.
Expectations on business conduct are not limited to companies
meeting their legal and technical obligations, but rather

Key facts$4.45mThe global average cost of a data breach in 2023, thehighest average on record. This was an increase of 15%
over the last three years.26

74%
The number of breaches involving a human elementin 2023.27

United States
The country with the costliest average total data breach
at $9.48m.28

16adopting patterns of behaviour that embrace high standardsof business ethics, thereby creating value for investors andstakeholders.
The sub-themes that we align our activities with are deliberately
broad, as misconduct can manifest in many different forms.
Issues can have a widespread impact on citizens, including
bribery, leaks of personal information or damaging hacks.
Meanwhile, businesses participating in high-level corruption,exerting political influence, partaking in anti-competitive
practices, and providing poor transparency on its tax liability
can erode the ability of societal institutions to properly
function. These issues can often remain hidden from public
view until regulators act or issues are revealed by investigative
journalism. The result is that engagement on this theme istypically more reactive and company-specific, with a focus
on reforms and restitution. Within the over-arching theme ofbusiness conduct, we engage on a range of sub-themes, eachof which contains its own best practices, however there areseveral common features that we encourage companies towork towards:• The highest ethical standards should be central to corporate
culture and enforced among employees.
• Formal oversight from the board, including strategic
decisions around anti-competitive practices and tax strategy,
through company bylaws.
• Acknowledging misconduct within their business, and putting
governance procedures in place to prevent reoccurrence.
In 2024 we expect a continued focus on data privacy andsecurity, in particular in the context of a more unstablegeopolitical environment, significant fines in tax and bribery
and corruption issues being at the forefront.

Data privacy and Security
The world has become exponentially more connected as theage of a digital economy unfolded, with most companies now
heavily reliant upon technology – a trend that accelerated duringOutlook – 2024 Engagement projects and priority issuers

the pandemic as increasing numbers of people worked fromhome. When combined with the valuable data that companies
store and process to function, whether that be personal data ofcustomers or intellectual property, the scale of cyber security
issues is unprecedented. The question is no longer ‘will we be
attacked?’ but rather ‘when will we be attacked?’, as evidenced
by the high number of companies that have had multiple data
breaches.
Since the General Data Protection Regulation (GDPR) was
introduced in 2018 in the European Union, companies
globally have increased their focus on cyber security ranging
from enhancing technological capabilities to improving
recruitment of personnel with specific expertise in the field.
Our engagement with companies typically focuses on theirgovernance procedures and board accountability, rather thandetailed security or legal procedures, as well as how companies
report to investors to demonstrate the robustness of their
preparedness.

Corporate tax
As the global economy struggles for growth with inflationarypressures increasing the cost of living and interest rates
expected to be higher for longer, we believe investors should
expect increased scrutiny on corporate taxes as governments
seek to manage their economies.
Addressing public concerns around large companies not paying
their fair share of tax requires not only international tax reformby policy makers, but also better efforts by companies toimprove public awareness and understanding. We encouragecompanies to ensure transparency by providing user-friendly tax
disclosures that a range of stakeholders may understand. Large
companies with complex business structures are often thetarget of scrutiny by governments in this area (e.g. technology
and financial sectors).
The Global Reporting Initiative (GRI) is a globally recognised
sustainability standard that includes requirements andrecommendations for tax disclosure under GRI 207. This
disclosure can provide investors with valuable examples andcontextual information on companies’ tax strategies. We willcontinue to encourage country-by-country GRI disclosure in our
engagements.

Bribery and Corruption
Finally, one of the highest forms of misconduct in the workplaceis bribery and corruption. There are many types of corruption
in businesses, not all being linked to bribery, however they
all run the risk of leading to criminal proceedings and canhave a significant impact on the company. Risks include
legal/regulatory action, fines and settlement fees, impact onfinancial and operational performance, increased scrutiny fromstakeholders and significant reputational damage.
Companies should have appropriate governance and internal
control processes in place to deal with such matters. However,this is not always the case and as a result, our engagement
is focused on improvement in systems and procedures toprevent the situation occurring again, oversight by the Board of
Directors and encouraging the enforcement of a strong cultureof compliance throughout the organisation.

IBM Security, The Cost of Data Breach Report
Verizon Business, Data Breach investigations Report 2023
28
BM Security, The Cost of Data Breach Report
26
27

17

Outlook – 2024 Engagement projects and priority issuers

Seven themes of engagement:

Corporate governanceOur engagement summary
Effective corporate governance is instrumental to supporting
the delivery of strategic objectives that drive long-term
shareholder value. It is also critical to fostering accountability
and maintaining legal, ethical, and reputational standing among
a company’s key stakeholders. From quality boards to greater
shareholder rights, we believe that well governed companies
are better positioned to manage risks, identify opportunities,
and deliver sustainable growth for our clients. Our Corporate
Governance Guidelines (which have been updated for 2024)
detail our global stewardship philosophy and underpin our
approach to voting at annual general meetings (AGMs). The
key tenets to our approach have remained consistent over theyears. We expect companies to have:• An empowered and effective board and management team• Appropriate checks and balances in company management
structures• Effective systems of internal control and risk management
covering all material risks, including ESG risks• A commitment to promoting a culture of transparency andaccountability grounded in sound business ethics• Executive compensation policies that reward the creation of
long-term shareholder value• A commitment to protecting the rights and interests of allshareholders in the company
Our expectations and how they apply to contemporary corporate
situations are often reflected in how we vote at AGMs. We believethat voting, accompanied by engagement, is a powerful toolfor improving individual company practices and overall market
standards. For key investee companies, we aim to clarify ourunderstanding of good governance and approach to voting where
our votes do not align with management. We believe our global
approach is effective at strengthening a board’s composition,

18

executive compensation practices, and accountability for
financially material environmental and social matters.

Board diversity
Diversity in the boardroom and senior management can bringsignificant value to any organisation. A diverse mix of skills
and perspectives is critical to enhancing a company’s ability toidentify, manage, and oversee strategic risks and opportunities.
We believe companies that are better able to recruit and retain
the most diverse possible combination of people are more
likely to generate strategic competitive advantages.
We therefore continue to place great emphasis on gender
diversity. We consistently engage on this topic and encouragecompanies to increase the number of women on their boards.
For example, continuing in 2024, we will be engaging withsome of the most influential companies in Asia that maintainboards comprised solely of men to encourage increased
gender diversity. Out of the 26 Asian companies we engaged
with in 2023, we have seen 12 of them add a woman to theboard in 2023.
In addition, as in prior years, our overall diversity efforts will
focus on increasing diversity beyond gender at the board,
management, and general workforce. Where appropriate
diversity levels across gender, racial and ethnic representation
have not been met from our perspective, we will generally notsupport the re-election of nomination committee chairs orother relevant directors.

Board composition and effectivenessThe election of directors is the most common voting item
globally and requires thoughtful assessment. We haveenhanced our focus on board leadership accountability and willseek to increase the extent to which we hold key committee
chairs responsible for lagging governance indicators such

Outlook – 2024 Engagement projects and priority issuers

as sustained poor compensation practices and a lack ofappropriate board diversity. Where a board committee holds
responsibility for the overall identified governance concern, we
will generally hold the respective committee chair responsible in
the form of a vote against. We will continue to vote against nonindependent directors at boards that our analysis shows lackbalance, or who sit on key board committees which we view aslacking sufficient independence. As described above, we will
also continue to vote against nominating committee chairs on
boards that lack diversity.
In 2024, we will also seek to engage boards on how they
are assessing board and management’s respective skills,
backgrounds, and overall effectiveness. These engagements
will include exploring their practices and policies concerning
annual board evaluations including relevant disclosure. This
will also include assessment of the annual board evaluation’s
interplay with gauging the board’s focus on strategy.

Succession planning
Succession planning is key to continued execution of businessstrategy throughout CEO and senior management transition.
Properly planned and executed succession planning helps
maintain and increase long-term shareholder value, build trust
within the market, and effectively manage companies’ key talentpipelines. We believe companies that effectively manage seniorleader succession are able to retain and attract the best talent
and are more likely to deliver value over the long term.
In 2024, we will look to engage with more companies on
their succession planning efforts. We expect companies
to dedicate time and thought to this process, have a board
committee responsible for oversight of the process, and beable to articulate both short- and long-term plans. Both internaland external candidates should be considered for leadership
positions through robust management of the talent pipeline.

Furthermore, executive compensation should be structured
to reward not just the CEO, but other senior leaders within thebusiness. This helps mitigate key person risk and retain key
personnel that is crucial during transition periods.

Executive pay
Levels of compensation and other incentives should bedesigned to promote sustainable, long-term value creation andreflect the executives’ work and contribution to the company.
We expect all companies to demonstrate alignment of their
executive compensation with strategic business objectives andcompany performance. Performance metrics should relate to
the company’s articulated strategy and consider risk tolerance.
Targets should be constructed to align executive incentives tothe interests of long-term shareholders.
In 2023, we continued our focus on engaging climate highimpact sector companies on how executive pay was linked (ornot linked) to their respective climate priorities. More broadly,
we will continue to encourage all companies to consider
whether financially material environmental and/or social
metrics might be appropriate within their short and/or long-term
incentive plans. If included, we believe environmental and social
key performance indicators (KPIs) chosen by the company
should be quantitative and measurable. Ideally, we wish forthese KPIs to include specific targets that are also disclosed.

As long-term investors we value
relationships built on trust.
19

Outlook – 2024 Engagement projects and priority issuers

Engagement
projects
On an annual basis, we capture client priorities through a
two-stage client consultation. This helps us set priorities forthe engagement agenda for the upcoming year, including
engagement projects. Project-based engagementson specific issues normally run for two or three years,
culminating in a final assessment of progress.

20Outlook – 2024 Engagement projects and priority issuers

Priority engagement projects
Our engagement projects for 2024 are outlined below and are ordered by their environmental,social and governance theme. In the creation and selection of these projects, we incorporate
feedback from clients to ensure our engagement activities are aligned with their priorities.

Coal phase-out 2.0
Lead Analyst

Industry

Theme

StatusTom Barron,
Analyst, Responsible Investment

Utilities

Climate Change

Ongoing

Vicki Bakshi,
Climate Strategist, Responsible Investment
With many electric utilities in the US and EU now having clear
strategies to phase-out coal through decommissioning, in 2024
we will look to target our engagement with those companies
seeking to retrofit or convert their coal-fired units, as well as
those who are looking to sell these assets. This is likely to becompanies based in Asia.
We will look to assess the technical and economic feasibility ofsome of the proposed technologies for conversion, for example
with Carbon Capture Utilisation and Storage (CCUS) or co-firingwith ammonia, seen across Asia. For those seeking conversion
to biomass, we will look to engage with them on theirsustainable sourcing policies. For those seeking to sell theircoal assets, we will look to understand how they are seeking todo this in a responsible manner. Engagement on these topics
will aid us in understanding the credibility of these companies’
transition plans, and the associated real-world emissions
reductions.
We will seek to continue to engage on the Just Transition,and the range of social implications associated with a phaseout of coal. In addition we will deepen understanding of
how companies are managing physical climate risks, suchas heatwaves and drought, which have exacerbated energy
security concerns in many countries, in part due to the impact
on thermal coal generation.

Deforestation
Lead Analyst

Industry

Theme

StatusJoe Horrocks-Taylor,
Analyst, Responsible Investment

Cross-sector

Climate Change

Ongoing

In 2023 we prioritised issuers for engagement using abespoke tool that we have developed to appraise the qualityof deforestation management of issuers involved in soft
commodity value chains. We engaged with issuers spanning
multiple soft commodity value chains in an effort to improvetheir commitments, traceability and due diligence.
Moving into 2024 we plan to deepen our focus on
corporate readiness for the EU Deforestation Regulation(EUDR), particularly around the traceability and geolocation
requirements which some issuers are finding particularly

challenging. We also intend to continue to evolve from anissuer-focused approach to a more systematic engagement
approach. This systematic approach involves taking a morestrategic look at specific soft commodity value chains,
identifying pinch points where we have sufficient holdings andgood leverage to drive change, and engaging with different
issuers within the supply chain, financiers and regulators.
We will look to focus this systematic approach on soft
commodities that are the furthest from meeting the EUDR
requirements.

21

Outlook – 2024 Engagement projects and priority issuers

Responsible governance of AI helps companies torealise business benefits such as solving complex
problems to driving efficiency gains while also
safeguarding AI risks to enhance customer trustand brand reputation.

Emissions & plastic waste (Chemicals)
Lead Analyst

Industry

Theme

StatusNikki Lantigua Jackson,
Analyst, Responsible Investment

Chemicals

Environmental
stewardship

Ongoing

The chemicals industry has had serious adverse impacts on
the environment and is a major contributor to GHG emissions
that are responsible for climate change. The chemicalindustry’s final energy consumption is the highest of any
industrial sector; its operations cause substantial runoff ofpollutants into the local environment, air and waterways; andmany chemical sector products – e.g., plastics and fertilisers –are also causing serious harm to the environment.
In its final year of a 3 year period, this project will engage withthe 20 largest chemicals companies by market cap, focusing

on the following targets as we look towards a sustainabletransition within the chemicals sector:
1) Reducing GHG emissions;2) Minimising harmful effects on local communities;
3) Reducing plastic waste.
Building on its initial focus on decarbonisation (GHG
emissions), wider environmental topics such as toxicity andbiodiversity will now be focused on.

Responsible governance of Artificial Intelligence (AI)Lead Analyst

Industry

Theme

StatusLorraine Hau,
Analyst, Responsible Investment

Consumer Discretionary,Technology

Human Rights

Ongoing

Our responsible governance of artificial Intelligence projectseeks to engage companies that did not have a commitment
to ethical AI principles as assessed in the 2021 findings of theDigital Inclusion Benchmark. At the time of the launch, only 20
out of 150 companies had evidenced a public commitment.
As of September 2023, 52 of the 200 companies in the Digital
Inclusion Benchmark have adopted ethical AI principles.
The breakout of Generative AI in 2023 spurred stakeholderinterest in exploring the benefits of AI, including increased
efficiencies and cost reduction. Equally, there has been moreinterest in exploring how companies should seek to safeguard
AI risks. The companies in the project are at various stages

22of their journey. While we saw some progress being made bycompanies in the project, other companies were more reluctant
to share information.
For 2024, the project will build on the understanding ofcompanies’ approaches to responsible AI. We will focus on
how companies define AI in their business and businessstrategy, how they operationalise their responsible AI principles
in practice, their governance processes for responsible AI, andhow they identify, assess, and mitigate the risks they have
exposure to.

Outlook – 2024 Engagement projects and priority issuers

Diversity in clinical trials
Lead Analyst

Industry

Theme

StatusEllen Brauers,
Analyst, Responsible Investment

Pharmaceuticals

Public HealthOngoing

The objective of this project in 2023 was to assess issuers’
awareness of the importance of diversity in clinical trials andexisting strategies, and to understand the challenges they
are facing in increasing diversity in clinical trials. Drawing on
our research and dialogues with pharmaceutical companies
and Contract Research Organizations (CROs) we identified an
initial 5 key elements of a diversity in clinical trials strategy:
policy commitment, governance, target-setting, stakeholder
engagement and addressing systemic challenges.

For 2024, we will engage on these findings and the identified
good practices across these 5 elements. To stay ahead ofevolving regulation and increasing commercial risk, we willencourage companies to make full use of industry bestpractices and collaborations to assess and improve diversity
in clinical trials. We will encourage those with limited or no
disclosure to be more transparent regarding their strategy.
We will encourage leaders to provide greater disclosure on
the success of their diversity in clinical trials strategy, thereby
setting an example for the rest of the industry.

Improving board gender diversity in Asia
Lead Analyst

Industry

Theme

StatusYu-Ting Fu,
Analyst, Responsible Investment

Cross-sector

Corporate governanceOngoing

This project will continue its focus on the largest issuers in Asia
which still have an all-male board. There is research evidence
conducted as recently as December 2023 which shows thatan inclusive and diverse company – especially at the highest
leadership level – often outperforms other less diverse peers.
The global average female representation on the board is

19.7%, while Asia only has 11.7% female representation as at
2022 with all-male boards still commonly seen. While regulatorssuch as Malaysia, India, Taiwan, and Hong Kong have appliedpressure to eliminate male-only boardrooms, we believe there
is still room for improvement at a swifter pace which we willencourage through our engagement.

23

Outlook – 2024 Engagement projects and priority issuers

Sustainable critical mineral supply chains
Lead Analyst

Industry

Theme

StatusJoe Horrocks-Taylor,
Analyst, Responsible Investment

Automobile manufacturers,
Automotive parts &equipment, Diversified Metals& Mining, Electric utilities

Climate Change,
Human Rights

New

Albertine Pegrum-Haram,
Analyst, Responsible Investment
The energy transition requires substantial amounts of metals
such as copper, nickel, cobalt, aluminium, lithium, rare earth
elements (REEs) as well as steel with lower embodied carbon.
This could result in mismatches between supply and demand
for several of these transition metals, with cross value chain
collaboration needed to invest in supply, improve efficiency andsubstitute where possible. There are also substantial social
risks associated with the mining and refining of these minerals.
In this project we intend to engage both the demand side
(automakers and utilities) as well as the supply side (mining) toevaluate the consistency in their identification of minerals that

may become supply constrained over different timeframes.
On the demand side we intend to explore whether automotive
and utilities companies have secured sufficient supply of themetals they need to deliver the energy transition they are
targeting. We will also evaluate the ability of companies tosubstitute or increase the efficiency with which they use minerals
that may be supply constrained, and to conduct due diligenceof their critical mineral suppliers to minimise social impacts andrisks. On the supply side, our aim is to engage mining companies
on their plans to expand the production of minerals that will be
critical to the energy transition while minimising impacts on local
communities and indigenous populations.

Responsible water stewardship
Lead Analyst

Industry

Theme

StatusAlby Pegrum-Haram,
Analyst, Responsible Investment

Mining, Beverages,
Agriculture

Climate Change,
Environmental Stewardship

New

Water stress and vulnerability are already endemic risks insectors such as mining and agriculture and as pressure
on water resources increases – through stressors such as
climate change and increased urbanisation – we see this as
an important time to engage on water stewardship strategies.
In our view, companies that embed responsible businesspractices and that recognise water as a shared resource will bebetter insulated against conflicts that can arise as stakeholders
compete for this shared resource.

24

In this project we aim to engage a set of companies in the
agriculture and mining sectors on topics such as:
1. How they are assessing water risks and materiality
2. What actions they are taking to mitigate and adapt towater stress
3. How they are modelling and accounting for future water
risks driven by climate change
4. What internal oversight exists of water management
practices and how it is embedded into company-wide
strategic decision making.

Outlook – 2024 Engagement projects and priority issuers

While some regulators haveapplied pressure to eliminate
male-only boardrooms, we believe
there is still room for improvement
at a swifter pace which wewill encourage through ourengagement.

Sustainable food systems
Lead Analyst

Industry

Theme

StatusMarcus Wilert,
Analyst, Responsible Investment

Consumer staples
and consumer
discretionary

Environmental Stewardship,
Climate Change, Labour
Standards, Public Health

New

The food and beverage industry is facing a number of socialand environmental risks, while needing to provide food for a
growing population. Through this multi-year project, we aim totake a systemic approach to challenges including addressing
plastic pollution, reducing GHG emissions, managing water
stress and soil depletion, securing working conditions inoperations and supply chains, and eliminating deforestation inraw material sourcing. We view these as particularly material tothe industry given the regulatory and operational environment.

In our view, understanding how these transitions are being
implemented in the face of concerns around capacity andfinancing will also be important from an investment perspective.
Engagement to understand the industry’s approach to theseissues, what best practice looks like and how companies are
performing relative to that will be the focus of this multi-year
project focusing on key material issues in a progression overthe project life.

Independent board evaluations
Lead Analyst

Industry

Theme

StatusAndrew Droste,
Analyst, Responsible Investment

Cross-sector

Corporate Governance

New

High quality board evaluations are conducted by independent
third-party facilitators. Such facilitators are charged withassessing the strengths and opportunities of a board
within the context of existing skillsets (as evaluated by the
independent facilitator), interplay with the management team,the company’s strategic priorities, their strategic peers, andregional governance best-practices. These evaluations should
assess oversight practices, processes, and behaviours of thefull board and its committees. Lastly, the evaluations should
include individual director feedback and recommendations visà-vis overall board and management opportunities. This type of
independent board evaluation reaps numerous benefits for thecompany and its shareholders; in particular, unlike many othertools, it helps quantify whether the board is effectively executing
their duties on behalf of shareholders. This is increasingly
important in light of market-wide business reformation related
to stakeholder capitalism and the focus on sustainability –both of which are increasing the roles, responsibilities, andtime commitments for directors. We intend to request thatissuers commit to such a process and enhance their disclosure
concerning general strengths, opportunities, and outcomes
identified in the process (e.g., revised succession plans, board
skill priorities, boardroom and management communication
practices etc.). As this can be a laborious undertaking,especially for board and management leadership, we will
recommend that one be conducted triennially.

25

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