PUBLIC EQUITIES ESG

Integration & Active
Ownership Policy
2023
June 2023

Contents
Scope & Purpose

3

About Barings

3

Barings ESG Approach & Firm Oversight4

Conflicts of Interest

4

Introduction to Our Public Equities Team

4

Training of Investment Professionals

5

Incorporating & Integrating ESG into Our Investment Process

5

Active Ownership: Engagement

12

Active Ownership: Ongoing Monitoring & Escalation

14

Active Ownership: Voting

16

Our Approach to Exclusion

16

GHG Reporting

16

External Reporting17

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Scope & Purpose
The ESG (environmental, social and governance) Integration and Active Ownership Policy (“the Policy” or “ESG and Active
Ownership Policy”) outlines:
1. How the Public Equities Investment team incorporates ESG and undertakes company engagement as well as voting
activities for the public equity strategies under their management;
2. The integral role of ESG in Barings Public Equities team’s investment philosophy and research;
3. Why Equities investment believes ESG considerations are a fundamental component of the goal of achieving attractiverisk-adjusted returns that we strive for in our stewardship of our clients’ assets.
The policy applies to Barings LLC and its subsidiaries and has been designed to meet the requirements of the European
Union’s Shareholder Rights Directive 2017.

About Barings
Barings is a global investment manager sourcing differentiated opportunities and building long-term portfolios across public
and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America,
Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and iscommitted to sustainable practices and responsible investment.
Reflecting our commitment to responsible investing, Barings has been a signatory to the United Nations’ Principles of
Responsible Investment (“PRI”) initiative since January 2014. Furthermore, we are signatories to the UK Stewardship Code 2020
and the United Nations Global Compact (“UN GC”) initiative in support of the United Nations Sustainable Development Goals.

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Barings ESG Approach & Firm Oversight
We consider ESG information alongside other variables that may impact an investment’s risks and returns over time. As partof our overall commitment to risk-adjusted returns, we endeavor to construct portfolios that meet our clients’ risk-return
profile—this includes integrating ESG criteria into our investment process.
We engage with the entities we invest in with the aim of enhancing their performance for the benefit of our clients.
Further detail on Barings ESG approach and firm oversight can be found in the Barings Sustainability Policy.

Conf licts of Interest
Conflicts of Interest can occur when the interests of a Barings entity or entities and Barings associates (“Associates”) interferewith or have the potential to interfere with Barings’ fiduciary obligations to its clients (“Clients”). Barings has therefore
established a Global Conflicts of Interest Policy, which can be found on our website.

Introduction to Barings’
Public Equities TeamWe believe that material ESG dynamics can influence the risk characteristics and earnings potential of a company andtherefore ESG represents an important consideration for active investors. We therefore integrate ESG into investment
research and portfolio management decisions and engage with companies on ESG issues. We prefer active engagement
over blanket exclusions of entire sectors, as we believe engagement has a greater chance of successfully effecting change.
This approach also has the potential to create value for our client portfolios. Our approach to divestment is described in thesection titled ‘Escalation.’
As medium- to long-term investors looking to identify unrecognized growth over a five-year time horizon, we believe it iscritical to assess the long-term sustainability of a company’s business model. ESG considerations are an integral element of
this as they provide additional insight into our fundamental assessment of company’s potential. It also enhances our decisionmaking process and therefore our ability to deliver our goal of achieving superior risk-adjusted returns for our clients.
As we aim to execute our stewardship responsibilities, we will continue to consider ESG a critical component of our overall
investment process. As ESG data and practices evolve, we will further enhance our approach to continue to capture theopportunities that consideration of these factors brings.
The ESG philosophy and process described in this policy is applied across all assets managed by the Public Equities team.

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Training of Investment
Professionals
We continually work to improve the quality of our analysis, of which ESG is a part.
To assist us with this, our investment professionals receive both structured external
and internal training as follows:

EXTERNAL TRAINING
Barings has purchased third-party databases that our investment professionals
are trained to use. In addition, investment professionals are encouraged to attend
conferences and talks related to ESG & sustainability and pursue other educational
opportunities. External providers periodically visit Barings to update our investment
professionals on any updates and changes to their ESG practices.

INTERNAL TRAINING
Internally, there are a number of avenues through which our investment
professionals receive ESG training. These include training received throughpeer review of company research, direct training received by the investment
professional’s team head and training received from the Barings’ Sustainability andCompliance teams.

Incorporating ESG Into
Our Public Equities
Investment Process
ESG topics are key considerations within our fundamental, bottom-up investment
analysis. This is because we believe that ESG matters are material to our investment
thesis, and thus are important to long-term investment performance.
The Barings Equities team incorporates ESG into its research and uses its
shareholder rights to influence the disclosure and behavior of investee companies.
By seeking to improve corporate ESG, we aim to deliver better risk-adjusted returns
for our clients. For more information on our engagement practices, please see thesection titled ACTIVE OWNERSHIP: ENGAGEMENT.
ESG data is not uniformly measured and disclosed, and investors largely remain
reliant on the voluntary disclosures of the businesses they seek to evaluate.
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and quantify prevailing inefficiencies, corporate risks and opportunities. Our team collects relevant data and assesses the
ESG dynamics of the companies under research. In addition, our investment professionals also draw on the depth andbreadth of their industry knowledge to engage with companies, build relationships with and gain additional insight from thecompanies in which we invest.
Although we do not have rigid minimum ESG standards for our investee companies, we expect portfolio companies to havebetter or equal ESG standards relative to their country of incorporation.

ESG ASSESSMENT
Our ESG assessment is a proprietary component of our fundamental research which impacts both our valuation of acompany, and our assessment of a company’s quality. Our ESG assessment is dynamic as our investment professionals also
look for signs of improving or deteriorating ESG standards.
Meetings with company management teams provide the Public Equities team with primary insights into corporate strategy,
vision, and culture. These meetings are instrumental in our assessment of the ESG-related issues facing the company.
Moreover, effective governance at the board level is an essential area of consideration for our investment professionals. The
relationships fostered through regular meetings helps promote the rights of minority shareholders. Additionally, as part ofour initial and ongoing analysis, our investment professionals meet with government officials, visit operational facilities andanalyze industry competitors to better understand potential risks, including ESG, where applicable and practical.
To supplement the in-house analysis completed by Barings’ investment professionals to evaluate ESG risks andopportunities, our team also has access to third-party resources that provide us with issuer-specific ESG data. Some of
the third-party sources we currently draw upon include MSCI ESG Research, Bloomberg ESG and Sustainalytics, as well
as research reports provided by approved third-party research providers. Barings’ professionals also engage with theseproviders to help ensure that the services provided meet our needs.
Furthermore, our analysts will monitor controversies including those flagged by one of our third- party research providers
and assess these for potential material impact on the investment thesis.
Our approach enables us to uncover potential unrecognized investment opportunities, whilst also aiding in identifying andmitigating potential risks. Our proprietary methodology also supports our commitments to both the UN Global Compact
and the PRI.
We use a standardized ESG assessment framework to capture the environmental, social and governance dynamics of
current and potential portfolio companies. The following categories constitute our ESG assessment framework:•

Sustainability of the Business Model (Franchise)•

Corporate Governance Credibility (Management)•

Hidden Risks—Including environmental and social (Balance Sheet)

Within each of these categories, we consider a number of ESG issues organized in nine sub-categories relevant to areasof potential risk or opportunity. Our ESG framework enables us to analyze companies in different markets and sectors in a
repeatable and consistent manner.

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OVERVIEW OF OUR PROPRIE TARY ESG FR A MEWORK
Category

Nine Sub Categories

Data/Issues to Consider

Sustainability Of
the Business Model(Franchise)

Employee Satisfaction

Employee Relations: Staff Turnover; Strikes; Remunerationof Staff; Fair Wages; Injuries; Fatalities; Unionized
Workforce; Employee Engagement, Diversity & Inclusion

Resource Intensity

Water Usage; Greenhouse Gas (GHG) Emissions; Energy;
Transition Risks

Traceability/Security in Supply Chain

Traceability Of Key Inputs; Investments in Protecting
the Business from External Threats, e.g. Cyber Security,
Physical Risks from Climate Change; Backward Integration(Protection Of Key Inputs); Transition Risks in Supply Chain

Effectiveness of Supervisory/
Management Board

Sound Management Structures: Separation of Chair &CEO; Size of Board; Independence of Board; Frequency of
Meetings; Attendance Record; Voting Structure; Female
Participation on Boards.

Credibility of Auditing Arrangements

Credible Auditor; Independent Audit Committee;
Qualification to Accounts

Transparency & Accountabilityof Management

Access To Management; Financial Reporting; Tax Disclosure
and Compliance; Appropriate Incentive Structure;
Remuneration of Staff; Gender & Diversity Considerations;
Employee Relations

Environmental Footprint

GHG Emissions; Carbon Intensity; History of Environmental
Fines/Sanctions; Reduction Programs in Place for Water/
Waste/Resource Intensity, Air Quality; Transition Risks;
Physical Risks from Climate Change

Societal Impact of Products/Services

Health/Wellness implications of Consumption of goods/
services; Product Safety issues; Community Engagement

Business Ethics

Anti-competitive practices; Bribery/Corruption; WhistleBlower Policy; Litigation Risk; Tax Compliance; Freedom of
Speech; Anti-Slavery and Human Rights; Gender & Diversity
Considerations

Corporate
Governance
Credibility(Management)

Hidden Risks on
the Balance Sheet,
Including ESG
Consideration(Balance Sheet)

Each of these ESG considerations has an impact on the valuation of the investment and the qualitative assessment of
the company.
Every company considered for investment by the Public Equities team is evaluated under these nine ESG sub-categories
using a mix of data from MSCI, Sustainalytics, Bloomberg ESG and internal research and then rated one of the following:•

Unfavorable•

Not Improving•

Improving•

Exemplary

Each sub-category is equally weighted and the sum of the nine ratings corresponds with a premium or discount, ranging
from -1 to +2 percentage points, in standardized increments that is added to the Barings Cost of Equity (“CoE” or discountrate), which our investment professionals use in the valuation of the company. Please refer to the below section, “Valuationof the Investment”.

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CARBON COSTS
One of the factors, which quite often can present a material risk to companies,
is greenhouse gas emissions (GHG). In 2015, when the Barings Equities teammore deliberately integrated ESG factors into the analysis of companies, we
acknowledged the risk of regulators internalizing projected environmental costs
and the potential for these to impact a company’s financial returns. This risk has
now materialized and the scope of regulations has increased and is continuing
to increase as more jurisdictions take measures to incentivize companies
to decarbonize their operations. The World Bank, in its “State and Trends ofCarbon Pricing 2021” report, estimates that nearly 25% of GHG emissions are
now covered by a carbon pricing mechanism.
As this continues to evolve, in 2022 we formally enhanced our analysis of ESG
to allow for an additional two percentage points adjustment to the CoE in orderto account for the impact internalized carbon costs can have on company
earnings depending on the sectors and jurisdictions it operates in. Sectors that
may be subject to additional carbon adjustments include: Electricity and Heat
Generation; Oil Refineries; Steel Works; Production of Iron; Aluminum, Metals,
Cement, Lime, Glass, Ceramics, Pulp, Paper, Cardboard, Acids, Bulk Organic
Chemicals, Commercial Aviation, Maritime.
It is important to note that carbon costs are just one risk that may arise fromthe transition to a low-carbon economy. Stranded assets, supply chain risks
and regulatory risks are other aspects that can impact the value of companies.
We look to capture transition risks in our standardized ESG scorecard, as
outlined above. Therefore, the two percentage points impact from carbon
costs is in addition to the maximum two percentage points ESG addition to
CoE, which our investment professionals can add if the company is facing
unfavorable ESG dynamics.
This maximum addition reflecting carbon costs is based on bottom-up analysis
we have carried out on companies in scope of the European Union Emissions
Trading System (EU ETS). The enhancement enables our Public Equities team
to further differentiate GHG-intensive companies subject to carbon adjustment
mechanisms, whether those mechanisms are local or cross-border.
In order to better determine what the addition to CoE coming from Carbon
Dioxide Equivalent (CO2e) costs should be, our team will attempt to quantify
these by analyzing the topics below. These can also be used as the basis forengagement with companies. Regular engagements help us to monitor how
company attitudes and approaches to decarbonization evolve and if the CoE
addition from CO2e can be adjusted if the company starts to fall behind on
its commitments.

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Category

Key Topics

Data/Issues to Consider

Carbon Costs

Current CO2e Emissions

Is this company subject to carbon adjustment mechanisms, either
cross-border or local. For example, CBAM, EU ETS, China ETS,
Russia ETS, US ETS etc., or does the company currently incur or isit likely to incur CO2e costs over the next five years?
Sectors likely to be most impacted include: Electricity and Heat
Generation; Oil Refineries; Steel Works; Production of Iron;
Aluminum, Metals, Cement, Lime, Glass, Ceramics, Pulp, Paper,
Cardboard, Acids, Bulk Organic Chemicals, Commercial Aviation,
Maritime.

Decarbonization Commitmentsa.

The company has a ‘net zero’ carbon target and is in linewith national targets in the jurisdiction where the company
operatesb. There are intermediate targets clearly communicated over a 5
and 10 year horizonc. Tangible projects are in place related to climate change
mitigation with current and proven technology
d. Management incentives are aligned with carbon reduction
targetse. The targets have been certified by an outside organizationf.

Use of offsets is insignificant

Where the company is subject to carbon adjustment mechanisms, the analyst will evaluate the company’s decarbonizationcommitments and rate them one of the following ratings against each of the six considerations above:•

Unfavorable•

Not Improving•

Improving•

Exemplary

Each question is equally weighted and the sum of the six ratings corresponds with a premium of a maximum of 2% that is
added to the CoE.

PHYSIC AL RISK FROM CLIM ATE CHANG E
Physical risks resulting from climate change can be event driven (acute) or longer-term shifts (chronic) in climate patterns.
Physical risks may have financial implications for organizations, such as direct damage to assets and indirect impacts
from supply chain disruption. Organizations’ financial performance may also be affected by changes in water availability,sourcing, and quality; food security; and extreme temperature changes affecting organizations’ premises, operations,
supply chain, transport needs, and employee safety. In order to assess the impact of such risks, we run third-party climate
scenario analyses and combine these results with our knowledge of companies. Where a company falls in the top quintile
by Climate Value at Risk in either an “Average” or “Aggressive” Physical risks scenario, we identify, by engaging with thecompany management or through other sources of information, what climate adaptation measures the company is taking.
In particular, we assess:
1. What acute physical risks to its business has the company identified, the impact it is having on the businesses, strategy,
and financial planning and the steps it is taking to increase business resilience
2. What chronic physical risks to its business has the company identified, the impact it is having on the businesses,
strategy, and financial planning and the steps it is taking to increase business resilience
3. What tangible projects are in place related to climate change adaptation, and if they are to be achieved with current
and proven technology

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4. How the board oversees climate related risks and opportunities
5. Management’s role in assessing and managing climate-related risks and opportunities
6. What targets the company uses to manage climate-related risks and opportunities and performance against
those targets
Where appropriate, we encourage companies to report on physical and transition risks in line with the Task Force on
Climate-related Financial Disclosures (TCFD) guidelines.

VALUATION OF THE INVES TMENT
ESG considerations influence the company-specific risk premium, which in turn affects the Barings Cost of Equity ourinvestment professionals use to value a company. The CoE is specific to each company. Better and improving ESG practices
lead to a lower CoE, while poor and deteriorating practices will result in a higher CoE. As a result, the ESG assessment has adirect influence on our valuation of companies.
CoE is the minimum rate of return required by equity investors for committed capital. Since the cost of capital varies
from market to market, and is dependent on economic and monetary conditions, CoE varies too. Determining CoE canbe challenging, introducing complexities and issues of consistency between investment desks. Our approach enables us
to determine CoE (or discount rate used to value companies) across markets, making it possible to perform comparisons
between companies in different markets. In addition, our approach makes full use of the company-specific expertise of ourequity analysts.
Below is our proprietary decomposition of the CoE, where we highlight how, amongst other factors, ESG dynamics andcarbon costs are reflected.

Systematic
COST OFEQUIT Y(DISCOUNTR AT E )Impact to COE=

RISK FREE
R AT E

5Y IMF CPIForecast+2.25%
Average Risk Free
Rate of the 5-year
forecasting period+

Idiosyncratic

EQUIT Y RISKPREMIUM+

STOCK
SPECIFIC
RISK

+

ESG

+

CARBON

4% Developed(0 to 2%)(-1% to 2%)(0 to 2%)

5% Emerging

Sector Risk

6%Frontiers

Regulatory Risk

Barings assessmentof ESG

Emissions
Mitigation

Economicclassification

Business Cyclicality

Political Risk

Carbon Taxes

Earnings Volatility
Balance Sheet

Social Risk
Credit Risk

Rating companies on the basis of their ongoing ESG behavior rather than making a static judgment based on historicalperformance is consistent with our forward-looking analysis and the intention to reward progress and improvement andtherefore may have a higher impact on investment decisions.

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QUALITATIVE A SSESSMENT OF A COMPANY
The ESG analysis is also directly linked to the overall stock score such that these assessments directly influence the overall
quality score of every company. A detailed example of such a scorecard is displayed below:

F U N D A M E N T A L R I S K— C O N S I S T E N T C O M P A N Y S C O R E C A R D
A consistent research approach helps evaluate companies and determine attractiveness by country and sector

Key Inputs
P R O P R I E TA RY
FINANCIALFORECASTS

COMPANYMEETINGSGROWTHSECTOR/I N D U S T R Y/
MACRO TRENDSESGC O N S I D E R AT I O N SQUALIT Y

VA L U AT I O N

HistoricalFranchise

Barings Valuation Method

last 3-years’ net earnings growthcompetitive advantage,
efficiency, stability

5-years discounted by our Barings
Cost of Equity to set price targetand determine upside

Near-Termnext 12-months’ net earnings growthManagement

Long-Term

competence, commitment andalignment with shareholder Interest

next 5-years’ net earnings growth

Earnings Basednext 12-months forward P/E multiple

Balance Sheet

Return Based Valuation

cash flow, working capital,
capital structure analysis

P/B relative to ROE and P/Brelative to cost of capitalC O M PA N Y S C O R E 1-5
Each company is rated on a scale of 1-5, with a 1 score being
the most favorable and a 5 score, the least attractive.

Before investing, portfolio managers consider investment professionals’ recommendations regarding growth, quality andvaluation, all of which reflect ESG issues and opportunities. Once invested, portfolio managers and analysts continue tomonitor each investment to determine that our thesis remains intact and that its risk and return profile remains attractive
relative to other opportunities available in the market.

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Active Ow nership: Engagement
Barings applies the PRI’s definition of engagement, which is“Interactions between an investor (or an engagement service
provider) and current or potential investees (e.g., companies),
conducted with the purpose of improving practice on an ESG issue,changing a sustainability outcome, or improving public disclosure.
Engagements can also be carried out with non-issuer stakeholders,such as policymakers or standard setters.”
PRI

Engagements are undertaken to influence (or identify the need to influence) material ESG practices and/or improve ESG
disclosure. Through engagement, we aim to enhance the performance of our investments, for the benefit of our clients inline with our stewardship responsibility. We do not, however, attempt to impose an inflexible approach that ignores local
norms and contexts. We believe that value is derived from transparent communication with the companies in which we invest,
coupled with the expertise and discretion of our experienced analysts and portfolio managers, and that a one-size-fits-all
approach should not and cannot be applied across the wide range of assets we manage across the globe.
The prioritization of ESG engagement activities is guided by several inputs, including our commitments to the PRI and UN
Global Compact, and is broadly aligned with material issues by sector.
The Barings Public Equities team prefers to engage with companies as shareholders rather than issue blanket exclusions ofentire sectors as we believe engagement has a greater chance of successfully effecting change and unlocking value. It is also
our belief that we will have a greater chance of success of effecting change if we have a stake in companies whose practices
we wish to influence.
We aim to meet with all companies in which we invest or seek to invest at least annually. During these interactions we discussa range of topics including ESG issues. The investment professional responsible for evaluating and valuing the company isalso responsible for its ESG assessment and this is an integral part of our analysis. Our engagement activity is documented inBarings’ internal data warehouse and is disclosed at least annually.

COLL ABOR ATIVE ENG AG EMENT
There may be instances when one of our investment professionals determines that engagement on a particular issue should
be undertaken in collaboration with other investors / asset managers. Barings participates in a number of collaborative
engagement organizations. These activities are governed by the Barings Sustainability Policy.

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KEY ENGAGEMENT ISSUES
The prioritization of engagement activities is driven by several inputs, including
material issues by sector and our proprietary research of companies where webelieve there is potential to unlock value for our client.

OUR ENGAGEMENT PROCESSThe Equities team engagement process is outlined below:

D ATA G AT H E R I N G& C H E C K I N G D ATAINTEGRIT Y

E S C A L AT E
& MEASURE
EFFECTIVENESS

Initial Assessment

Monitorusing our Proprietary

and Govern

ESG Analysis Framework

Designing an

Engage to Improve

Engagement Plan

Disclosure andwhere Appropriate

Effect Change

G ATHERING INFORM ATIONAs mentioned above in our ESG assessment process, the Public Equities teamgathers information on ESG issues from direct research on company annual
reports and other disclosure documents as well as from external providers
such as MSCI, Sustainalytics and Bloomberg ESG. This stage is crucial, as key
challenges include data integrity, scope, and a lack of standardization. This is
why we couple third-party data with the knowledge and research from ourinvestment analysts and portfolio managers. Given the data challenges outlined
above, where available, we prioritize date gathered through direct research overthird party data sources.

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THE INITIAL ASSESSMENT
We use a proprietary standardized assessment framework to capture ESG performance of the companies in which we invest.
This assessment has a consistent structure to enable comparison. Our findings form the basis for further engagement and are
discussed in investment meetings and stock reviews.

CONSTRUCTING AN ENGAGEMENT PLAN
Where an analyst identifies specific ESG issues that need to be addressed, a formal engagement plan is prepared which forms
the framework for interaction with companies on the identified ESG issues.
Our view is that engagement needs to target clearly defined objectives, which address relevant areas of potential risk oropportunity for the company. We therefore structure each engagement plan in a way that is consistent with the categories
through which we assess company quality internally.
The following elements are included in each plan:•

Category of engagement; E, S, and/or G•

Sub-category issues to be engaged on; e.g. fair wages, whistle blower protections•

Data/issue relevant to the specified sub-category•

Objective of engagement; e.g. improve disclosure, change in behavior•

Title and position of individual we engaged with•

Actions and tangible milestones•

Timeframe including start date and target end date•Frequency of update•

Latest update

We focus our engagement efforts on companies where we believe we can have the greatest impact on shareholder value. This
enables us to conduct focused and in-depth engagement with companies that can effect change.

Active Ow nership:
Ongoing Monitoring & Escalation
In addition to regular meetings with companies to discuss strategy and ESG dynamics, our investment professionals willclosely monitor companies for progress on the specific ESG issues on which we have engaged. The frequency of monitoring
and targeted end date of the engagement is defined and included in the engagement plan.
As part of the ongoing due diligence, the investment analyst will continue to meet with company management to monitor
progress and to ensure that the investment thesis remains intact. If necessary, a change of view may be implemented toreflect any lack of ESG progress as part of an escalation process. Furthermore, these ESG issues are discussed as part of ourinvestment meetings and stock reviews.
The engagement plan is in line with our philosophy and process where we consider our investments on a five-year researchhorizon. As long-term investors we believe that this is key to improving disclosure and achieving our goals of changing
behavior to improve corporate culture in our investee companies.

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MONITORING
Monitoring takes place regularly and engagements are reviewed periodically for effectiveness and achievement of establishedmilestones and targets.
Progress is recorded in our internal research database so that investment managers have the most up-to-date informationon the issues raised. We utilize a traffic light system within our monitoring framework to show the progress of our identified
engagements in line with our approach to assessing corporate ESG behavior. This also makes it easier to identify whether
there is a need for escalation.
Where we identify a lack of progress from the company or the agreed end date of engagement is materially delayed, we
employ a formal escalation process.

ESC AL ATION
If ESG credentials are not improving or are deteriorating and are undermining the investment thesis, this is likely to have an
impact on our valuation and evaluation of the company.
Possible forms of escalation include:•

Review of thesis with portfolio management and potential adjustment to portfolio weighting,•

Vote on material issues against management or the board,•

Pursue of a collaborative engagement, or•Divestment

Part of the escalation process will involve articulating our ESG concerns primarily through private meetings with management
teams, as we believe that change is usually facilitated by positive working relationships and respectful exchanges of opinion
and information. The lead analyst or portfolio manager responsible for the company manages escalation, overseen by theirteam lead. The process of escalation further depends on local market practice and regulatory options.
The review of investment thesis following unsuccessful engagement, could increase the Cost of Equity and/or lead todeterioration of the quality score to such levels that the investment is no longer attractive on risk-adjusted basis relative toother opportunities in the investable universe and a divestment from the company may occur.
We may divest from and not invest in companies which have a quality score of 5—the worst level on our scale of 1 to 5—and a
ESG-related modification to the discount rate of +2 percentage points.

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Active Ow nership: Voting
VOTING
We undertake to exercise voting rights whenever possible and have retained a dedicated third-party proxy voting provider. In
those cases, where we disagree with the provider’s recommendations we have the ability to cast our votes differently.
Our policy is to vote on behalf of our clients as systematically as is practicable, using inputs from proxy advisers that are
reviewed by our portfolio managers. The European section of the Barings website outlines our voting records and our proxyvoting policy. These records show how we have voted in relation to both management and the recommendations of advisors.
In some cases, we may determine that it is not in the best economic interests of our clients to vote. In some markets,securities issuers impose fees on shareholders or their custodians for exercising the right to vote proxies. Others may “block”
or prohibit, shareholders from transferring or otherwise disposing of their shares for a period after the securities holders havegiven notice of their intent to vote proxies.
Moreover, some issuers require the registration of securities in the name of the beneficial owners before permitting proxyvotes. In effect, they require us to disclose the identity of beneficial owners, which may be contrary to the wishes of ourclients. It can also be the case that the companies concerned reject some of our votes for technical reasons.
As a matter of internal policy, Barings’ European unit does not engage in stock-lending.

Our Approach To Exclusion
Our approach is to engage companies and prefer this approach over blanket exclusions of entire sectors as we believe
engagement has a greater chance of successfully effecting change if we, as shareholders, engage with companies whose
practices we wish to influence. It is also our belief that we will have a greater chance of success of fully effecting change if
we have a stake in companies whose practices we wish to influence. We also believe this is an opportunity to create value
for investors.
Further detail on Barings approach to exclusion can be found in the Barings Sustainability Policy.

GHG Reporting
As mentioned earlier in this policy, the Public Equities team incorporates transition risks and physical risks from climatechange in our valuation and qualitative evaluation of companies. We utilize external data to run multiple climate scenarios withconservative assumptions and keep abreast of policy developments and industry trends. We couple this with our knowledgeof companies to identify potential risks to companies from climate change. Where we identify a need for improved disclosureor mitigation or adaptation efforts, we will engage with companies. We take guidance from international standards (such as
TCFD) and, where appropriate, will encourage companies to adopt practices from those standards.

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In addition, we monitor our portfolios carbon emissions and have devised our own
methodology of monitoring the carbon footprint of our portfolios. Therefore, we
can accommodate any requirements of asset owners in terms of carbon footprint
for separately managed accounts. We believe existing methodologies focusing on
intensity per unit of sales inaccurately reflect a company’s true carbon footprint.
Below is an explanation of our proprietary methodology.
•

Universe Definition: The universe for each portfolio is defined as the union of
all the stocks in the portfolio and benchmark.

•Calculation of Portfolio Carbon Tonnage: Carbon emissions data (Scope 1, 2
and combined) is sourced from a third-party vendor. Where a company is notcovered by the third party data vendor, we rely on internal Barings analysis.

•

Calculation of Benchmark Carbon Tonnage: Carbon emissions data (Scope 1,
2 and combined) is sourced from (third-party vendor) for benchmarks. Wherea company is not covered, we rely on internal Barings analysts using same
methodology as above.

•

Monitoring Portfolios: we scale the benchmark carbon footprint to the net
asset value of the portfolio and compare

External Reporting
The Public Equities team provides clients with quarterly ESG reporting for designatedstrategies as per client request or regulatory reporting. ESG reports include asummary of Barings’ ESG score profile, carbon emissions and carbon intensity
profiles compared to benchmarks, and a summary of recent engagement activity.
We expect that our ESG and sustainability reporting will continue to evolve as more
information is made available for public equities investments.
In addition, Barings publicly discloses its Company Engagement Report.

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Barings is a $351+ billion* global investment manager sourcing differentiated opportunities and building
long-term portfolios across public and private fixed income, real estate and specialist equity markets. With investment
professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve
its clients, communities and employees, and is committed to sustainable practices and responsible investment.

IMPORTANT INFORMATION
Any forecasts in this document are based upon Barings opinion of the market at the date of preparation and are
subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is notnecessarily indicative of the future or likely performance. Investment involves risk. The value of any investments
and any income generated may go down as well as up and is not guaranteed by Barings or any other person.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any investment results, portfolio
compositions and or examples set forth in this document are provided for illustrative purposes only and are notindicative of any future investment results, future portfolio composition or investments. The composition, size of,and risks associated with an investment may differ substantially from any examples set forth in this document. No
representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes
in the currency exchange rates may affect the value of investments. Prospective investors should read the offering
documents, if applicable, for the details and specific risk factors of any Fund/Strategy discussed in this document.
Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its
global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia
Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring
Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia)
Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, Baring Asset Management Korea
Limited, and Barings Singapore Pte. Ltd. each are affiliated financial service companies owned by Barings LLC (each,individually, an “Affiliate”). Some Affiliates may act as an introducer or distributor of the products and services ofsome others and may be paid a fee for doing so.
NO OFFER: The document is for informational purposes only and is not an offer or solicitation for the purchaseor sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any
consideration of the investment objectives, financial situation or particular needs of anyone who may receive it.
This document is not, and must not be treated as, investment advice, an investment recommendation, investment
research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or
particular investment strategy, and must not be construed as a projection or prediction.
Unless otherwise mentioned, the views contained in this document are those of Barings. These views are madein good faith in relation to the facts known at the time of preparation and are subject to change without notice.
Individual portfolio management teams may hold different views than the views expressed herein and may makedifferent investment decisions for different clients. Parts of this document may be based on information received
from sources we believe to be reliable. Although every effort is taken to ensure that the information contained inthis document is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy,completeness or adequacy of the information.
Any service, security, investment or product outlined in this document may not be suitable for a prospective
investor or available in their jurisdiction.
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Copyright © 2023 Barings. Information in this document may be used for your own personal use, but may not bealtered, reproduced or distributed without Barings’ consent.
The BARINGS name and logo design are trademarks of Barings and are registered in U.S. Patent and Trademark
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LE ARN MORE AT BARINGS.COM*As of June 30, 2023
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