Stewardship
Report2023

abrdn.com
abrdn.com

Summary of the UK
Stewardship CodeThe revised UK Stewardship Code, published by the
Financial Reporting Council (FRC), came into force
on 1 January 2020. It is designed to fundamentallyraise stewardship standards and introduces a
new definition:“ Stewardship is the
responsible allocation,
management, andoversight of capitalto create long-termvalue for clients andbeneficiaries leading
to sustainable benefits
for the economy,
the environmentand society.”
A key focus of the Code relates to the activities
supporting the outcomes of stewardship, not justthe intent of policy statements, across all asset
classes. There are 12 defined principles to be
applied by asset owners and asset managers.
This report sets out our response to the Codeand explains how our approach to stewardship isaligned with its principles. Because stewardship is
not just about how we invest, we also explain how
we apply the Code principles across other areasof influence and impact. Our appendix on page 83
highlights how the content within this report aligns
to each principle.

Contents

A message from Peter Branner,
Chief Investment Officer

5

A message from Amanda Young,
Chief Sustainability Officer

6

Purpose and Governance

7

Building a modern investment company

10

Governance framework12

Understanding what's material
to our business

13

Assurance

Exercising rights and responsibilities
Proxy Voting

54

Voting on environmental and social resolutions56

Voting process

57

Voting case studies

58

Policies and Processes
Our stakeholders – Employees

62

People as our key asset

64

15

Our stakeholders: Clients

66

Our stakeholders: Shareholders

68

A message from Andy Mason,
Head of Active Ownership

17

Our stakeholders: Regulators andpolicymakers and Affiliations

69

Our Investments business stewardshipaims and commitments

Our stakeholders: Communities 70

19

Our stakeholders: Suppliers

71

Active Ownership in Numbers

20

Corporate risk management

72

Investments Sustainability Governance

22

Identifying market wide and systemic risks

73

Investment Sustainability Strategy

26

Macro risks

74

Engagement Policy and Escalation
Approach28

Conflicts of interest

76

People as our key asset

32

Our corporate influence

78

Sustainability Research and Insights

33Transparency and reporting80

Collaborative engagement examples34

Sustainability reporting 

81

Thematic engagement –Net-zero stewardship

35

Thematic engagement - Employee
Wellbeing in the Mining Industry

37

Natural capital strategy

38

Stewardship across asset classes

40

Equities

41

Fixed income

42

Real estate

43

Integration across asset classes

46

Company engagement examples

47

Stewardship Approach

Appendix
Sustainability Council Governance Structure 83

Mapping to the UK Stewardship Code Principles

84

Companies mentioned throughout this report are included only todemonstrate examples of our engagement efforts and should not
be deemed as a recommendation to buy or sell any securities.

Stewardship Report 2023

3

Purpose &Governance

Stewardship Report 2023

4

A message from Peter Branner,
Chief Investment Officer“At abrdn, we believe we have a duty to
be engaged owners of the assets in which
we invest, as we aim to enhance the valueof our clients’ investments.”

As responsible investors, we ensure that stewardship andthe consideration of ESG factors are given due attention
as part of our business. Our aim is to make a positive
difference – for our clients and the companies in which
we invest, while considering the impact on society andthe wider world. It’s about aiming to achieve our clients’long-term financial goals while doing the right thing.
With increasing scrutiny and expectations from various
stakeholders, it is vital that we are transparent about our
stewardship activities and outcomes.
At abrdn, we believe we have a duty to be engaged
owners of the assets in which we invest, as we aim toenhance the value of our clients’ investments. In 2023
alone, we voted on 73,780 resolutions and carried out
a total of 2,008 ESG engagements, highlighting ourcommitment to active ownership.
Over the past year there has been increasing debate
about the purpose, outcomes, and usefulness of ESG.
Reflection, review and analysis are healthy and in themarket we continue to see questions across the wide
spectrum from ESG having no commercial value to ESG
being a panacea for all social and environmental ills.
Our focus is our client and what is financially material forthem. Our stewardship of investee companies begins withthe ‘G’ of ESG – corporate governance. This considers how
the boards and executives of companies direct strategy
and manage operational issues linked to environmental
and social factors that are financially material to theirbusiness. We believe that well managed companies havethe ability to innovate and deliver long-term financial
success that is beneficial to our clients. Our focus is thefinancially material factors that will deliver these benefits.

Stewardship Report 2023

As asset managers we face an evolving and increasingly
challenging regulatory environment that requires
a greater level of reporting on our actions and theoutcomes of those actions. We have continued to evolve
our regulatory and fund specific reporting and are wellplaced to meet these additional requests as they evolve.
To support these outcomes-based assessment models wehave aligned our approach with the UK Stewardship Code.
The Code and its Guiding Principles have helped focus our
thinking and ensure that we are developing our strategies,
investment beliefs and culture to create long-term value
for clients. We detail these steps in the report.
Key to delivering these goals are our people. It has beena difficult year for the industry and many asset managers
have seen changes to their workforce, including abrdn.
We see our employees as our greatest asset and willcontinue to invest in their growth. We use our worldwide
investment expertise and local market resources to seekout investment opportunity globally. Through active
investment, stewardship and innovation, we aim to deliver
sustainable and future-fit investment solutions to help
every client achieve more with their capital.

Peter Branner
Chief Investment Officer5

A message from Amanda Young,
Chief Sustainability Officer“I am confident in the ability of our teams
to continue to support and meet therequirements of the UK Stewardship Code,in support of our client needs and outcomes.”

I am delighted with our continued efforts in meeting the UK
Stewardship Code. Integrating sustainability factors into
our investment process and ensuring we are engaged anddedicated stewards of our clients’ capital continues to becore to our investment activities.
Our Sustainability Group works hard to ensure that our
research, standards, frameworks, voting and engagement
activities meet our client needs and outcomes. Our wellresourced team of sustainability experts, supported bydedicated on-desk investment professionals, ensures westrike the right balance between integrating materiality
and independence and oversight.
This has been a challenging time for those involved insustainable investment and stewardship, balancing thecontinued demands of investors and clients with thegrowing regulatory landscape. It has required constantreview of activities and structures to ensure that we remain
future fit.
I am confident in the ability of our teams to continue tosupport and meet the requirements of the UK StewardshipCode, in support of our client needs and outcomes.

Amanda Young
Chief Sustainability Officer

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6

Our purpose

abrdn is a global investmentcompany that helps clients andcustomers plan, save and invest for
the future
Specialist asset management

UK savings and wealth platforms

Investments

Adviserinteractive investor (ii)1

Our capabilities in our Investments
business are built on the strengthof our insight – generated fromwide-ranging research, worldwide
investment expertise and local
market knowledge.

Our Adviser business, theUK’s second largest advised
platform by AUA, provides
financial planning solutions
and technology for UK financial
advisers which enables them tocreate value for their businesses
and their clients.

Powered by the UK's secondlargest direct-to-consumer
investment platform, ourinteractive investor businessenables individuals in the UK toplan, save and invest in the waythat works for them.

Our clients:– Individuals– Financial advisers– Discretionary fund managers

Adjusted operating profit

Our clients:– Insurance companies– Sovereign wealth funds– Independent wealth managers– Pension funds– Platforms– Banks– Family offices
Adjusted operating profit

Adjusted operating profit

£118m
AUA

£50m

£73.5bn

AUM

Cost/income ratio£366.7bn

Our clients:

£114m
AUMA

£66.0bn
Cost/income ratio

60%

47%

Cost/income ratio

94%
Source: abrdn Annual report and accounts 2023.
1

Personal has been renamed ii and includes Personal Wealth unless otherwise stated.

Stewardship Report 2023

7

Our purpose
To enable our clients tobe better investors

What sets us apart
A diversified business supporting clients at all financial stages

Trusted brands
with strong market
positions

Diversified, multiclient segment
business model
creating a resilientorganisation

Positive and decisive
action to strengthen
the business model

Embedding
AI andtechnology inthe business

Strongcommitment tosustainability andclimate action

Industryleading platforms
enabling enhanced
client service
and value

Operating in markets
with structural
growthcharacteristics

Strong balance
sheet andshareholder
returns

Shaped by our cultural commitments

We put the client first

Stewardship Report 2023

We are empowered

We are ambitious

We are transparent

8

Our purpose

abrdn is an asset manager with £366.7bn2 in AUM. We focus on areas where we have both the strength and scale
to capitalise on the key themes shaping the market, through either public markets or alternative asset classes.

Spec
ialis
t eq
uit
ies

me
inco
ed
Fix

Priva
te c
red
it

tate
l es
a
e
R

Public markets

Alternatives

Risk aware

Better outcomesfor clients

ure
ic s
ist
lo g

Mu

a nd

e m b ed de dlti- aruct

sset

Infrast

ES G

Al

2

te
rn
a

tiv
e in
ves
tme
nt so
lutions

Q

ive
itat
t
n
ua

abrdn Annual report and accounts 2023.

Stewardship Report 2023

9

Our business model

Stewardship Report 2023

10

Value shared with stakeholders

Clients
We focus on delivering outcomes that truly
matter to our clients. We draw on our expertiseand insight with the aim of delivering longterm investment performance.

Long-term value created42%

Diversified business and a strong
balance sheet support longterm value creation

Three-year investment performance

PeopleInvestment in long-term growth

We aim to attract and develop the best
people for leadership roles, and to offer clear
pathways for career advancement.

54%

Payment of dividends and thereturn of excess cash toshareholders

Employee engagement scoreSociety
We have important responsibilities to society
and the environment. We combine the powerof responsible investment with the positive
impact we can have through our operations.

No.1

Ranked asset manager byWorld Benchmarking Alliance3

Shareholders

How we make money

We aim to create sustainable shareholder
value over the long term. We have a strong
track record of returning value to shareholders.

We earn money mainly fromasset management and platform
fees based on AUMA. We alsoearn revenue from subscription
and trading fees, and earn aninterest margin on
cash balances.

14.6p
Full year dividend

The World Benchmarking Alliance is a non-profit organisation holding
companies accountable for their part in achieving the Sustainable
Development Goals. This ranking is from 2022 and remains the mostcurrent. More detail can be found on their website.
Source: abrdn Annual report and accounts 2023.
3

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11

Governance framework

Board
The Board’s role is to organise and direct the affairs of the Company and the Group in accordance with the Company’s constitution, all relevant laws,
regulations, corporate governance, and stewardship standards. The Board’s role and responsibilities, collectively and for individual Directors, are set
out in the Board Charter. The Board Charter also identifies matters that are specifically reserved for decision by the Board. During 2023, the Board’s key
activities included approving, overseeing and challenging:• The updated strategy and the 2024 to 2026 business plan to implement
the strategy.
• Capital adequacy and allocation decisions including the decision to sell
stakes in HDFC Asset Management.
• Oversight of culture, our standards and ethical behaviours.
• Dividend policy including the decision framework governing when to
return the dividend to growth.
• Financial reporting.
• Risk management, including the Enterprise Risk Management (ERM)
framework, risk strategy, risk appetite limits and internal controls and inparticular how this was adapted for blended working including working
from home.

• Significant corporate transactions.
• Succession planning, in particular in the appointment of Jason Windsor.
• The quarterly performance of the Investments business.
• The ESG approach, both as a corporate and as an asset manager.
• Significant external communications.
• The work of the Board Committees.
• Appointments to the Board and to Board Committees.
• Matters escalated from subsidiary boards to the Board for approval.

The Board regularly reviews reports from the Chief Executive Officer and from the Chief Financial Officer on progress against approved strategies andthe business plan, as well as updates on financial market and global economic conditions. There are also regular presentations from the Business CEOs
and business functional leaders.
Chair

Chief Executive Officer (CEO)Senior Independent Director (SID)• Leads the Board and ensures that its
principles and processes are maintained.

The CEO operates within authorities
delegated by the Board to:• Promotes high standards of corporate
governance.

• Develop strategic plans and structures forpresentation to the Board.
• Make and implement operational decisions.

The SID is available to talk with ourshareholders about any concerns that they
may not have been able to resolve throughthe channels of the Chair, the CEO or Chief
Financial Officer, or where a shareholder was
to consider these channels as inappropriate.

• Lead the other executive Director and the
ELT in the day-to-day running of the Group.

The SID leads the annual review of theperformance of the Chair.

• Together with the Company Secretary, sets
agendas for meetings of the Board.
• Ensures Board members receive accurate,
timely and quality information on the Groupand its activities.
• Encourages open debate and constructive
discussion and decision-making.
• Leads the performance assessments andidentification of training needs for the Boardand individual Directors.
• Speaks on behalf of the Board andrepresents the Board to shareholders andother stakeholders.

• Report to the Board with relevant and timely
information.
• Develop appropriate capital, corporate,
management and succession structures tosupport the Group’s objectives.
• Together with the Chair, represent theGroup to external stakeholders, including
shareholders, customers, suppliers,
regulatory and governmental authorities,
and the local and wider communities.

Non-executive Directors (NEDs)
The role of our NEDs is to participate fully in
the Board’s decision-making work including
advising, supporting and challenging
management as appropriate.

Nomination and GovernanceCommittee (N&G)

Audit Committee (AC)Remuneration Committee (RC)• Board and Committee
composition and appointments.

• Financial reporting.
• Internal audit.

• Development andimplementation of
remuneration philosophy andpolicy.

• Succession planning.
• Governance framework.
• Culture, Diversity, Equity &Inclusion (DEI).

• External audit.
• Whistleblowing.
• Regulatory financial reporting.

• Incentive design and setting ofexecutive Director targets.

• Non-financial reporting (ESG).

• Employee benefit structures.

Risk and Capital Committee(RCC)• Risk management framework.
• Compliance reporting.
• Risk appetites and tolerances.
• Transactional risk assessments.
• Capital adequacy.
• Anti-financial crime.

Executive leadership team (ELT)The ELT supports the CEO by providing clear leadership, line of sight and accountability throughout the business. The ELT is responsible to the CEO for
the development and delivery of strategy and for leading the organisation through challenges and opportunities.
Businesses

TalentEfficient Operations

Control

Business CEOs support the CEO
to deliver growth across thebusiness:

The Chief People Officer (CPO)
supports the CEO in developing
talent management andsuccession planning and culture
initiatives.

Strategy, Technology, Legal and
Finance ELT members, including
the CFO, support the CEO by
overseeing global functions
and the delivery of functional
priorities.

The Chief Risk Officer (CRO)supports the ELT and the CEO intheir first line management of risk.
The Chief Internal Audit Officer
attends ELT controls meetings.

• Investments.
• Adviser.
• ii.

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12

Understanding what’smaterial to our business
Assessment process
Understanding our approach

What is a double
materiality assessment?

Following a transparent process

Sustainability materiality assessments consider the
relative significance of topics to a business. Topics
are assessed in view of potentials impacts, risks,and opportunities, with either financial applicability
to the business, or outward potential for impact on
the economy, people, and the environment.
Materiality assessments consider stakeholder
perspectives on the activities and relationships of abusiness, within the bespoke context of its industry
and operating environment. These inputs are thenassessed to inform the prioritisation of sustainability
topics and strategies, with outputs often presented
with an illustrative matrix.
The value of a double materiality assessment is thatit considers both financial materiality and impact
materiality, with assessed impacts, risks, andopportunities not limited to those with objective ties
to financial performance.

There is no widely accepted standard for double materiality
assessments. The concept is now recognised in regulation
but is yet to be fully cemented in practice. We accept that
our approach will likely need to evolve in the long term andchoose to disclose our approach and methodology toprovide transparency on the steps we followed.
Limitations to the assessment
One of the primary challenges of double materiality
assessments is that quality inputs are required froma variety of stakeholders to shape a credible output.
We made efforts to capture key stakeholder views but
the voluntary nature of engagement, and resource
constraints, are limiting factors. As we perform similar
exercises in future, we will carry forward key learnings
to refine our approach over time.

Illustrating our assessment process
Phases and milestones to enable our double materiality assessment:

00

01
To support ourassessment, we
worked with anindependent
consultant to limit
potential bias andprovide a view ofbest practice.

02

03

Decision to perform
double materiality
assessment tohelp prepare for
future regulatory
requirements.

Desk research toreflect on industry
and regulatory
context and todevelop a universeof potential issues.

Mapping exerciseof stakeholder
groups to engage
in the process.

Creation of ashortlist of thematic
topics and businessenablers, as the basis
for the assessment.
Validation of shortlist
by internal subjectmatter experts.

04
Internal interviews
with senior leadersand subject-matter
experts.

Analysis of survey
and interview results.
Application ofweightings forresearch andstakeholder input.

External interviews
from client,investor and NGO
perspectives.

Scoring of inputs
to determine
financial and impact
materialityof topics.

Survey open tocolleagues, key third
party suppliers, andtrade association
contacts.

Output and insightfrom the assessment
developed anddocumented.

Leverage otherapplicable materials
to broaden analysis.

05
Stewardship Report 2023

Internal validation
with subject-matter
experts and13senior leaders.

Our material
sustainability topics
Our latest assessment
Background to our double materiality review
We completed our double materiality assessment
in early 2023 and this reflects our understanding ofmaterial sustainability topics for our business. Our belief
is that considering both financial materiality and impact
materiality is important as global investors, as we
consider the ability of topics to alter the enterprise valueof a business, or influence investment decision-making,alongside the wider potential for impacts on the economy,
environment, and communities. Our previous sustainability
materiality assessment was conducted in 2019 with theintervening period subject to radical global changes andtransformation for our business. In relative terms, 2023
has been a year of stability, and our view of material
sustainability topics for our business remains consistent
with the outputs from our latest materiality assessment.
Areas of focus
We have used the outputs of our materiality review torefine our corporate sustainability strategy. This report
includes disclosure relating to all our material areas offocus, and signposts to our wider reporting suite where
additional information can be found. Our impacts, risks,and opportunities manifest differently across our value
chain due to the nature of our business as global investors.
This assessment should therefore not be interpreted as astatic, or absolute view, rather as basis of how we prioritisesustainability topics as components of our strategy.

Level 1
Climate change
Ethical conduct and financial practices
Human and labour rights
Cyber security and data privacy

Level 2
Diversity, equity, and inclusion
Financial inclusion and access to services
Community support and development
Biodiversity and natural capital
Education, opportunity, and talent development

Understanding the output and priority level
All topics are material and will be importantcomponents of our evolving sustainability strategy.
We have grouped the topics across three priority
levels to illustrate areas of focus.
Level 1

Level 3
Health, safety, and well-being
Waste, consumption, and circularity

Topics considered to pose the greatest relevanceto our ability to create value and/or reflect highest
outward impacts on society and the environment.
Level 2
Topics considered very significant and requiring active
management as components of our sustainability
strategy.
Level 3Topic of emerging importance versus previous assessment.
Topic identified as of high importance to stakeholders.

Topics considered important but with relatively lesssignificance, versus other identified topics.

Stewardship Report 2023

14

Assurance

Case study
Enel

We produce an annual internal controls
report for our investments business. This
report is prepared specifically for use by our
institutional clients and their auditors to help
them understand our investment activities andcontrol procedures. It covers all the activities weundertake as stewards of our clients’ assets andthe control environment through which they aredelivered and controlled. As we describe in thisreport, the consideration of wider risks are built
into all of our processes and so the review of thecontrols within our processes helps to provide
independent assurance over the delivery of
our stewardship responsibilities. The reportcontains an assurance assessment from theindependent auditor.

We screen certain fund ranges, e. g., Sustainableor Thematic, against adherence to the principlesof the UN Global Compact (UNGC), which coverhuman rights, labour rights, corruption, andenvironmental concerns. There is no universal,
authoritative standard on what constitutes abreach of the UNGC principles so judgement
must be applied. We use third-party data andanalysis to highlight companies considered to
be in breach of the UNGC principles and pair thiswith our own analysis. Third-party assessments
provide an independent view. However, at times,
detail to support this view can be limited. Our own
analysis often provides the further informationneeded to come to an informed conclusion on
UNGC breaches.

For our stewardship activities, our internal
governance structure is designed to provide
assurance - both through reviewing our policies
and approach and providing a check andchallenge over our processes. Our Enel casestudy demonstrates our governance structurein action, and how we take into account all of
our stakeholders’ needs.

Our process is overseen by a Sustainability
Standards Group, with representative membershipfrom across the business. The group acts as
an escalation point to challenge views on
UNGC breaches. Through this forum, individualcompanies’ adherence to the UNGC principles isassessed in order to determine whether investment
is appropriate for the relevant fund ranges.

As a signatory to the Principles for Responsible
Investment (PRI), we have submitted to their
independent assessment for a number of years.
This review of our stewardship and responsible
investment activities acts as an accountability
mechanism and allows us to continually
improve our processes using feedback fromthe PRI.

As an example of this process, in May 2023 theGroup agreed to override an external data
provider’s assessment that Enel failed the UN Global
Compact based on Principle 1: Businesses should
support and respect the protection of internationallyproclaimed human rights in relation to the impactof several windfarm projects on indigenous
communities in Colombia.

In the latest PRI Assessment Report (published
for 2023 covering calendar year 2022), wewere rated against 14 investment modules.
We achieved the highest possible rating of 5stars across 7 of these and 3-star or 4-starratings for the remainder.

Reaching this decision involved significant dialogue
between the Sustainability Standards Group, ondesk analysts covering Enel, representatives acrosswider asset classes, and engagement with thecompany itself.
In supporting the case for the override, we noted
the historic nature of events and subsequent
remedial actions taken. We engaged with Enel andset milestones, amongst them a target of disclosing
processes for engaging with indigenous groups on
its website. The company has halted the projectin Windpeshi and is undertaking a full review of its
human rights procedures, which we welcome.
 he degree to which this analysis is used within the investment processTdepends on the characteristics or objectives of the fund or product.

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Stewardship
Approach

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16

A message from Andrew Mason,
Head of Active Ownership“Our thematic engagement has focused on several
areas. Including collaborating with others in relation
to climate change, and abrdn engaging with themining sector on human rights and a number ofsectors on long-term decarbonisation.”

ESG continues to develop and as it does, we are seeing
conflicting views sometimes acting contemporaneously
on both its financial materiality and its application. abrdn
is committed to being an active investor and focusing on
the ESG issues which are in the best long-term financial
interests of our clients. This is detailed throughout thereport in relation to both our governance of ESG and how
we put ESG into practice.
The area I would like to focus on is how we put ESG into
practice. Our approach is guided by robust researchand understanding. Both our investment desks and our
Sustainability Insights team provide detailed research atboth the company level and at the global thematic level.
Our focus is guided by the sustainable development goals
and the UN global compact and sits across four broadresearch areas: preserving natural capital, navigating
the climate transition, promoting a fairer society, andchampioning strong governance. These guiding principles
support our ongoing company engagement at both athematic and company specific level.

Stewardship Report 2023

Over the year our thematic engagement has focusedon several areas. Including collaborating with others in
relation to climate change, and abrdn engaging with themining sector on human rights and a number of sectors
on long-term decarbonisation. Through specific voting
standards we have also promoted macro themes suchas the promotion of diversity, equity, and inclusion. Ourinvestment desks across asset classes have tailored theirapproach to meet abrdn’s collective goal of leveraging
ESG to deliver long-term financial success.
In 2023, we published our voting priorities prior to the voting
season and updated Listed Company ESG Principles &Voting Policies to clearly communicate our expectationsof our investee companies. In October 2023, we published
how we actioned against these priorities.
Following the identification of our highest-financed
emitters in our equity and fixed income holdings(2022), we developed a framework and climaterelated engagement strategy; documenting ourescalation framework on engagements in our standalone Engagement policy which was published in
December 2023.

17

In 2024, we will continue to implement our active
ownership approach, notably through ongoingengagement with our top 20 highest financed emittersand dedicated diversity and inclusion voting strategies. We
will continue to update our Listed Company ESG Principles& Voting Policies at least annually and keep monitoring
and considering the demands for ‘client expression of wish’
and ‘client-directed voting’.
Our Equities teams operate a proprietary ESG scoring
system called the ESG Quality Score. This considers theregional universe and peer group in which a company
operates and allocates companies a score between 1
and 5 (1 indicating poorest performers). The team is also
working on an engagement road map set to be publishedin 2024. Our Fixed Income colleagues conduct ESG
assessments of a company’s credit profiles and assign
an ESG risk rating ranging from Low, Medium to High (lowindicating lowest level of risk). Our sovereign debt teams
apply priority models assessing both ESG and politicalrisks of country debt. Our quant funds apply various ESG
screens on behalf of our clients and work with investment
desks to deliver stewardship. Finally, our real estateteams continue to apply detailed rigor to our investments
including specialist environmental reviews.
The above is a small snapshot of the level of diligence
applied across abrdn to ensure the integration of ESG
factors into its investment process. Examples of the work
listed above can be found within the report.

Andrew Mason
Head of Active Ownership

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18

Our Investments businessstewardship aims andcommitments
To meet the needs of our clients and key
stakeholders, and create benefits for the economy,society and environment, we focus on thesecore areas:

01

02

03

04

05

Our investment process: We integrate
and appraise ESG factors in ourinvestment process, with the aimof generating the best long-term
outcomes for our clients consistent
with their risk and asset allocationpreferences.

Our investment activity: We actively
take steps as stewards to deliver
long-term, sustainable value
consistent with our clients’ objectives
and risk tolerance.

Our client journey: We clearly define
how we act in our clients’ interests indelivering our stewardship and ESG
principles and transparently reporton our actions to meet those interests.

Our corporate influence: We actively
support enhancements to policy,
regulatory and industry standards todeliver a better future for our clients,
the environment and society.

Our corporate activity: We gather
data to understand and manage
the material ESG factors in our own
operations to ensure our own impact
contributes to positive outcomes forall stakeholders.

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19

Active Ownershipin Numbers
2023 engagement statistics% of priority company meetings in 2023 where ESG topics were discussed4

80
71

70
60
50
40

22

21

24

24

24

15

24

15

10

9

18

17

Water Waste Management

Waste Management

Product Quality & Safety

Policies & Practices

Ownership & Control

Labour Practices

Human Rights

Governance Health Warning

GHG Emissions

Energy Management

Employee H&S

Employee Engagement, D&I

Ecological Impacts

Disclosure

Customer Privacy

Controversies

Accounting & Audit

0

25

2
Board Issues

5

11

Air Quality

10

15

21

Supply Chain Management (HRS)

20

Supply Chain Management (ENV)

30

4

36

32

Remuneration

40

Please note the chart above relates to our priority ESG engagements noted in the table. Sustainability topic breakdown is only available for our priority engagements.

Geographical breakdownof total ESG engagements
23%

Engagement Stats

29%

Total

Asia
EuropePriority ESG engagements

GEM
Japan
NorthAmerica

11%
16%

3%

UK

19%
5

Source: abrdn, December 2023.

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253

Non-priority ESG engagements

1,755

Total ESG engagements

2,008

Total companies engaged5

1,209

Some companies are subject to multiple engagements.

20

Actively voting across
our portfolios
2023 Voting Statistics
Total
Number of meetings voted

7,113

Number of meetings with at least 1 vote Against, Withhold or Abstain

3,805 (53%)

Total number of resolutions voted

73,780Percentage of resolutions voted against management recommendations

14%

Percentage of votes different from ISS policy

7%

Source: abrdn, December 2023.

Thematic breakdown of votes against
management recommendations
5%

Geographical breakdown of votes against
management recommendations
2%

65%
Audit Related

16%

25%

Capitalization

41%

27%

Asia
EuropeCorporate Transactions

7%

Director Related

GEM

Environmental and social

Japan

Other
Remuneration8%2%
Source: abrdn, December 2023.

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305%

Routine BusinessNorth America

2%

UK
12%
16%

21

Investments Sustainability
GovernanceIt should be noted that the stewardship code is applied toour investments business. interactive investor and Adviser
do not make direct investments.
Our Chief Sustainability Officer (CSO) sets and leads thesustainability strategy for abrdn’s Investments business.
The CSO is an executive member of the Investment
Leadership Team and has overall responsibility for
setting our sustainable investing strategy, ensuring
ESG (Environmental, Social and Governance) factors
are integrated, and stewardship activity is executed
across the Investments business. Our CSO reports to
our Chief Investment Officer (CIO) and has a dottedline to our CEO of Investments, to ensure sustainability
matters are embedded across the business value
chain. As we integrate ESG considerations into ourinvestment approach, the CIO and asset class heads
hold responsibility for enforcing integration within each
asset class.
Our CSO also leads our Investments Sustainability Group(ISG) which is responsible for setting the associatedsustainability standards, providing independent oversight,
delivering sustainability insights, driving our active
ownership strategy and supporting our clients across ourInvestments business.

Sustainability Council
The Sustainability Council is a senior governance bodywith responsibility for ownership and implementationof the sustainability strategy across the full spectrum ofservices delivered by the Investments business. It ensuresdifferent parts of the business have clear accountability
for their areas. It approves the principles and plans set by
the underlying strategy groups and provides an escalation
mechanism to help us manage complex sustainability
issues and risks within our Investments business.

Stewardship Report 2023

The Sustainability Council is comprised of six executives
who lead our Investments business and chaired by theInvestment CSO. The Council has the authority to set
sustainability standards, approve policies and set the
expectations for the implementation of our sustainable
investing strategy. The seniority of the Council ensures thatthe right level of priority is given to sustainability mattersand each area of business is aware of their responsibilities.
Senior managers and sustainability specialists, whooversee and drive sustainable activity across theInvestments business, are members of the Sustainability
Strategy Forum. This Forum oversees the implementationof the Sustainability Strategy, as agreed by the Council.
This allows us to coordinate sustainability matters acrossthe Investments business.
The supporting working groups are aligned to the Council’s
strategic priorities and are responsible for designingand leading the strategic priorities for their individual
areas that will enable the business to meet its objectives.
The strategic priorities are signed off and progress
overseen by the Sustainability Council. The Council
delegates responsibility for the implementation andprogress reporting to the relevant business areas.

Key investment priorities
The Council oversees five key investment priorities (shownin the diagram on page 23). These are areas of focus
that are set centrally to ensure we are targeting client led
sustainable investment outcomes, leveraging proprietary
research and strategic partnerships.

22

Investments Sustainability
Governance

Delivering research and insights which
provide authentic and consideredviews on the sustainability issues that
affect our investments, our clients andwider stakeholders.

Thought
leadership

Ensuring we can evidence
our commitments tosustainable investing, ESG
integration and deliveringin-line with our clients’
expectations.

Enhancing ourcredibility

Setting the standards
on sustainability forour investment teams,
ensuring our investment
frameworks and active
ownership activities arerobust, well-executedand governed effectively.

Investment
leadership

The Sustainability
Council

Building strategic end-toend data, analytics andtechnology solutions to
support our sustainable
investing value chain.

Enabling
our activities

Delivering
for clients

Ensuring our clients’ needs
are met, through ourinvestment processes,
products, services andreporting.

Source: abrdn, December 2023.

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23

Investments Sustainability
Governance
Investment Sustainability Council Governance Structure
In order to deliver the Investments business’s strategic sustainability priorities, the Sustainability Council leverages thefollowing underlying governance structure:

Investments Executive

Sustainability Council

Investment Forum

Growth Forum (Investments)

Investments Risk andControls Forum

Accountable
Executives

Sustainability Strategy Forum

Enhancing our
Credibility

Enabling our
Activities

Thought
Leadership

Delivering for Clients

Investment
Leadership

Delivered through Working Groups
Sustainable Investing Strategy Group

Climate Change Strategy Group

Sustainability Research Forum

Sustainability Standards Group

Sustainability Products Strategy Group

APAC and Americas Sustainability Institutes

Regulatory & Standards Taskforce

2nd Line ESG Forum Oversight

Source: abrdn, Sustainability Council, February 2023.

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24

Investments Sustainability
Governance
The working groups are aligned to the Council’s
strategic priorities and are responsible fordesigning and leading the strategic priorities fortheir individual areas that will enable the businessto meet its objectives. The strategic priorities
are signed off and progress overseen by the
Sustainability Council. The Council delegates
responsibility for the implementation and progress
reporting to the relevant business areas.
The regional Sustainability Institutes own thesustainability strategy across Asia Pacific and theAmericas, with the ability to directly escalate to
the Sustainability Council. They mobilise regional
staff and business functions to deliver on thestrategy and bring this nuance to the overall
strategic priorities.
For details of the high-level responsibilities of the
supporting groups, please refer to our Appendix
on page 83.

Sustainability Council alignment with wider
Investments governance
The Strategic Pillars are aligned to various
governance groups within the Investments
business, providing an escalation and reporting
mechanism to the highest level of management of
the Investments business.
. The Sustainability Council is made up of theInvestments business executive.
. The Sustainability Strategy Forum is responsible
for executing the Strategy and feeds into the
Sustainability Council.

. Issues around ‘Investment leadership’ areescalated to the Investment Forum.
. Issues around ‘Thought Leadership’ & ‘Delivering
for Clients’ are escalated to the Growth Forum.
. Issues around ‘Enhancing our Credibility’ and‘Enabling our activities’ are escalated to theInvestments Risk & Controls Forum.

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25

Investment Sustainability
Strategy 2024

Strategic Areas of Focus
Building on our foundations for the future to ensure that our client and investment needs are met.
Our focus for 2024 falls into three areas:

Amplify our voiceProtect & grow our assets

Simplify & enhancethrough our research, thought
leadership, influence and active
ownership activities

in supporting our investment
process, people capabilities, productdevelopment & client outcomesour processes, governancestructures & data strategy

Delivering for
Clients

Thought
Leadership

Investment
Leadership

Enabling our
Activities

Enhancing ourcredibility

Grow sustainableproduct pipelinealigned to client needacross regions

Strong sustainability
research for investment
teams and clients

Enhance ESG
integration acrossinvestment teams

Strengthen ESG data
governance model

Enhance risk andcontrols environment

Grow ESG knowledge
among client groupand clients

Strong voice toencourage industry
best practice

Build sustainability
outcomes model

Develop ESG analytics
toolkit within investment
operating model

Upskill staff on ESG andgreenwashing risks

Enhance client andregulatory reporting

Partner and collaborate
internally & externallyStrong active ownership
activities to drivechangeDeliver consistent
challenge to investment
integration practices

Build clear oversight in
1st, 2nd and 3rd line ofrisk management

Demonstratecredentials to meetclient & regulatory
requirements

Deliver the output
of programme into
operating model

Thought leadership on
sustainability themes

Stewardship Report 2023

26

Investment Sustainability
Strategy 2024
Embedding programmes into operating models
We have made significant progress moving data
projects into our BAU operating model. During the year,
abrdn appointed a new CIO. As part of the new CIO
office, a modelling and analytics team was established.
Data and analytics projects, largely undertaken by
previous programmes moved into this team to ensure
the work being built forms part of our future investment
platform, The aim is to ensure all our ESG data, tools andframeworks are part of our investment team processes.

Stewardship Report 2023

We have bolstered our ESG regulatory reporting,increased our level of ESG reporting for specific funds,
and completed the upgrading of ESG tools to increase
the ESG data provision to investment teams and to ourclients. In 2024, the key priorities of the programme willremain and that is to deliver solutions on a strategic, unified
data platform that will enhance data provision and ESG
tools (which includes engagement data); and continue
to ensure that consideration of regulatory change isembedded within our business.

27

Engagement Policy

We believe it’s our duty to be active and engaged owners of
the assets in which we invest. Our aim is to both enhance andpreserve the value of our clients’ investments by consideringa broad range of factors that impact on the long-term
success of the company. Through our engagement weseek to improve the financial resilience and performance ofinvestments, sharing insights from our ownership experiences
across geographies and asset classes. Where we believe weneed to catalyse change, we will endeavour to do so throughour strong stewardship capabilities.
As a global investor, with a focus on ESG, we leverage
our scale and market position to raise standards in boththe companies and industries in which we invest andhelp drive best practice across the asset management
industry.

How engagements are prioritised
Our engagement process consists of four components:. Review: Part of our ongoing due diligence and frequentinteractions led by the analyst responsible for oversightof the investment.
. Respond: Reacting to an event that may impact a single
investment or a selection of similar investments.
. Enhance: Designed to seek change that, in our view,
would enhance the value of our investment.
. Thematic: Resulting from our focus on a particular ESG

theme, such as climate change, diversity and inclusion
or modern slavery.

Our regular ‘review’ meetings are normally held with theinvestee company’s executive management, but we will
also engage with board members – generally the chairor other non-executive directors. Such meetings further
develop our understanding of how the board is fulfilling its
responsibilities and give us the opportunity to communicate
views constructively, as and when appropriate.
Our ‘respond’ and ‘enhance’ engagements are bespokeinteractions with specific outcome intentions and aredefined as priority engagements. These also focus on thedelivery of long-term value from the investments we makeon behalf of clients. The nature of ESG risks is such that they
are ever-present but often require a long-term outlook to
fully assess them.

Stewardship Report 2023

Our engagements will often be with board members, both
executive and non-executive, but will also include detailed
assessment of specific risk mitigation through engagementwith relevant experts within a company, including thoserelating to sustainability.
For our ‘thematic’ engagements, we select investments
which are felt to be materially impacted by sustainability
themes identified by our research. These themes may
arise in the short term due to particular events or may belong running in nature and impacting many sectors andinvestments. Engagements relating to a specific theme arelikely to occur over multiple planning periods and are often
led by our ISG experts.

How engagement efforts are organised
For every engagement, we have a wide pool of resources
to draw from. We have ESG expertise embedded within
our investment teams. Our on-desk investment analysts
are supported by the ISG, who bring specialist knowledge
on sustainability issues. These include, but are not limited
to, areas such as risk management, board composition,
remuneration, audit, climate change, labour issues,
diversity, equity, and inclusion, human rights, bribery,
and corruption. In addition, we leverage the macro
insights of abrdn’s Global Macro Research team.
The engagement planning process is led by ourinvestment desks, and is informed by our ongoing
diligence and research, reviews of investment sectors,
specific fund reviews, our ESG scoring mechanisms andthe peer review processes used by investment desks.
Our ISG provides detailed global thematic research andinsight on stewardship and sustainability issues across all
asset classes. Our research focuses on key sustainability
themes and is linked to the UN Global Compact andSustainable Development Goals (SDGs).
Our Sustainability Insights team conducts thematic
research to assess how changes in ESG issues could
impact investment behaviours and therefore negatively
or positively impact companies in which we invest.
Furthermore, conducting thematic research enables us
to conclude what should be deemed best practice andto encourage businesses to adopt these considerations
within their business practices.

28Engagement Policy

Investment SustainabilityGroup. Thought leadership. Restrictions &screening. Regulatory standards

Investment
Sustainability
Group

Active Ownership. Setting out

ActiveOwnership

engagement priorities. Setting out
voting policy. Insight on governance& sustainability trends
across companies
and sectors. Active Ownership

ClientTeam

Investment
Desks

Client Team. Meeting client needs. Engage and influence
external bodies

Investment Desks. Fundamental& expectations. Transparency. Reporting

research. Ongoing engagement. Portfolio management. Screening

We engage with our investments in a numberof ways:. Face-to-face meetings with board members, senior
executives and decision makers;. On-site visits to see progress in action;. AGM attendance to push for innovation and change;. Exercise rights as a shareholder through voting andprovide transparency around the rationale andexpectations behind our votes;

How engagement efforts are monitored
We believe that it is important for our engagement
activities to lead to improvements in our investments
and the way they manage and mitigate risks informs ourinvestment decisions. We record concerns and issues
raised with our investee companies and set timeframes
within which we expect our concerns to be addressed.
To do this we have defined the following ‘lifecycle’ steps forour engagements:. Collaborative engagements with other investors who
may be seeking to achieve similar change from a single
investment or a range of investments;. Meetings with ex-employees, customers, suppliers,. Identify: We identify specific concerns or issues to beraised with those investee companies.
. Acknowledge: The concern is acknowledged by those. Divestment in certain instances where a company’s
actions, strategy or plans don’t meet our, or client,expectations or benchmarks.

concerns.
. Close: The plan has been successfully executed and ourconcerns have been addressed.

stakeholders or other experts to verify information
provided by staff;

Stewardship Report 2023

investee companies.

. Plan: There is a credible plan to address our concerns.
. Execute: The plan is being executed to address our

29

Engagement Policy

Engagement with investee companies for certain asset
classes are recorded and identify the objectives for theengagement as well as the milestones, allowing us toclassify success markers at the start of the engagement,
and monitor (and report on) our engagements on
an ongoing basis. This is important given some of theoutcomes we are expecting will not be immediate, andit may be appropriate to set an engagement milestonewhich allows us to assess which steps the company
has taken after our engagement. These milestones
are created and tracked in relation to which steps
the company has taken after our engagement.
These milestones are created and tracked in relation tocompany engagement and the company’s progress,or lack of, against these milestones, which in turn informs
the company’s ESG ratings. We advise our investmentsof the areas where we wish to see improvement andcarry out desktop analysis or further engagement tomeasure progress.

Escalation Approach
We consider escalation on a case-by-case approach andaim to identify risks early and set measurable milestones
with investee companies. We may choose to resort toescalation in certain instances where a company isunresponsive, or in our view, the company is insufficiently
responding to a material issue. We have a decision treethat provides potential tools of escalation in the instancewhen an investee company in our view, has inadequately
responded to a material risk. At abrdn, we engage withinvestments through escalation actions to drive change
and achieve outcomes toward objectives. A flexible
escalation approach is essential, given certain escalation
actions may occur simultaneously or as part of regulardue diligence with investments.

Escalation Actions
RequestEngagement

Revise Internal
Assessments

Letter to
the Board

Ownership Rights
and Voting

PublicStatement

Collaboration with
External Parties

Divestment

Lead analyst
may choose torequest a follow up
engagement withmembers of senior
management or
the boardto addressmaterial risks.

Stakeholders
such as portfolio
managers, lead
analysts and
ESG specialists
where possible,
may choose torevise internal
quantitative
assessments
of investee
companies ona particular andmaterial risk.

Lead analyst may
choose, where
possible, to senda letter to senior
management
or the board tocommunicate
our milestones,
expectations
and suggest
a reasonable
timeline toprogress against
specific actions.

Voting is integral
to our Active
Ownership
activities. Leadanalysts and theActive Ownership
Team where
possible, maychoose to enforce
voting rights toencourage theprogress of aninvestee company
on a material risk.

abrdn maychoose to issue a
public statement
detailing its viewof a specific issue
in the market andits expectationsof investee
companies.

We leverage
participation
in industry
and investorsled initiative
frameworks. We
may choose to
escalate issues
to investee
companies
as a memberof initiative
frameworks,
with the aim tohave a unified
view and to takecollective action
to drive change.

We may choose
to divest where
possible, andwhere we findan investee
companies’
response hasmaterial negative
financial impacts.
We believe inengagement
approach overdivestment.

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30

Engagement Policy

Illustrative timelines for Escalation
Escalation tools are enforced at the decisive point it becomes clear the company has not followed the typical engagement
lifecycle: Identify, Acknowledge, Plan, Execute and Close. We assess the execution and credibility of a company’s plan for an
identified risk, through tracking of the delivery on milestones set in engagements or public disclosures. It is imperative thatthe time for fulfilment of engagement objectives remains flexible. For examples, investments such as emerging market or
high yield bond issuers may require more resource and time to deliver on outcomes.

Engagement lifecycle - illustrative timeline

Identify

Plan

Close

We have identified specificconcerns or issues to be raisedwith the company.

There is a credible plan
to mitigate the issue.

The plan has beensuccessfully delivered
and this issue is closed.

3 months

3 months

6 months

6 to 12 months

Acknowledge

Execute

The concern has been
acknowledged.

The plan is being executed toaddress our concerns.

≈ 1.5 to 2 years

Note: for illustrative purposes only.

We monitor our investments closely in order to assess whether they have established a credible plan to address theissue within 6 to 12 months of the initial conversation. We set milestones in engagements and measure progress against
measurable and reasonable milestones. We typically expect our investments to execute on a milestone between 6 to
12 months, depending on the issue and when the issue was raised. In a typical lifecycle engagement, we aim to engage
with our investments every year. We revisit progress against milestones set at the initial engagement. The engagement
lifecycle timeframes apply more strictly to developed market and listed equities companies, therefore flexibility isrequired for investments in emerging markets and fixed income. Risks may vary, depending on materiality and scale,some milestones may take several years to materialise than others.

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31

People as our
key asset
ESG and stewardship expertise

Training and development

Our investment teams are organised to integrate the consideration of ESG
risks and opportunities into decision-making. Day-to-day managementand ESG expertise is provided by our Investments Sustainability Group,
our Corporate Sustainability team, and the experts embedded across thebusiness in specific functions. Our ESG experts help to provide detailed global
thematic research and insight on stewardship and ESG issues that can beapplied across all asset classes and in our Global Macro Research team.

Our training on sustainability-related
matters comes in various formats and isdelivered to a wide range of colleagues
across the business. Globally, weare seeing increasing regulatory
expectations on sustainable investing
practices across key geographies.

Investments Sustainability Group27

individuals in theInvestments
Sustainability
Group

24
in the UK

17

10

02

01

femalesin APAC

males

in US

12

years’ average
investment industry
experience

Dedicated asset class ESG resources

26

12

14

19

04

01

01

01

dedicated ESG
expertsin the UK

in Brazil

femalesin APACin Europe

These expectations are often wideranging, covering areas including how
we manage environmental, socialand governance (ESG) risks andopportunities in our investments, how
we engage with companies, and how
we define and label our sustainability
products. As a result, we believe that
we must continue to enhance ourapproach and capabilities in line withthe evolving sustainable investinglandscape and, crucially, that this isunderpinned by a strong commitment
and innovative approach to learningand development.
In 2023 we launched the Grow
Sustainably Academy; a tailored
ESG training programme aimed atmeeting the needs of various teams
within Investments. Training covereda variety of topics, including but notlimited to: regulation and greenwashing,proprietary tool training, thematic
research and our engagement
approach. In total almost 40 training
sessions were held with more than 1,400
attendees across the sessions.

males

in the US

10years’ average
investment industry
experience

Source: abrdn, December 2023.

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32

Sustainability
Research and Insights
We believe that a full and thorough understanding of ESG
factors enables us to make better investment decisions,and this begins with rigorous research.

provide detailed global thematic research and insighton stewardship and sustainability issues across all
asset classes.

We undertake comprehensive due diligence before we
invest, considering material ESG risks and opportunities
alongside other financial metrics. We seek to understandwhether an asset is adequately managing those risks,
and whether the market has understood and priced
them accordingly.

The diagram below illustrates how our research focuseson key sustainability themes and is linked to the UN Global
Compact and Sustainable Development Goals (SDGs).
This research underpins our stewardship approach.

Sustainability
themesWe have ESG expertise embedded across our investment
teams, and complement this through collaboration
across asset classes, sharing research, experiences.
and understanding. In addition to our embedded ESG
specialists, regional investment teams are further
supported by our Investments Sustainability Group who

Preserving natural
capitalNavigating theclimate transition

Sustainable
Development Goals

UN Global Compact Environment• Natural capital data
• Biodiversity,

Topics• Deforestation

For more information, please refer to our approach tosustainable investing on our website.
Our research on macro themes is not done in isolation.
We also consider the macro risks that we face as acompany. Further details on our investment process andmacro research can be found on page 73.

Promoting a fairer
society

UN Global
Compact Labour

UN Global
Compact Human
Rights• Climate scenario
analysis• Working conditions,• Modern slavery,• Carbon metrics• Health & safety,• Supply chain issues,• Diversity, equity &inclusion• Inequality,• Staff development &talent retention,• Food & nutrition,• Oceans, water,• Net zero alignment• Circular economy:
plastics, sustainable
packaging• Carbon offsets• Credible transition
leaders• Food sector• Climate policy• Low carbon technology• Fuels of the future• Labour relations• Land rights,• Data privacy,• Community relations

Championing strong
governance andbusiness ethics

UN Global Compact
Anti-Corruption• Anti-bribery &corruption,• Audit issues,• Board balance, diversity,• Remuneration,• Director independence,• Shareholder rights,• Accountability,• Cyber security,• Tax,• Digital assets

Establishing authentic and credible insights & positions on sustainability issues that influence investment decisions

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33

2023 Collaborative
engagement examples
We are willing to act collectively with other investors inseeking to protect and enhance shareholder value, or tootherwise address issues that are relevant to our clients’best interests. Collaborative engagement may therefore
be used as a result of an escalation of our own activities
or to drive change relating to a specific theme across agroup of investments. These collaborations may involve a
bespoke group of selected investors, or one of the many
affiliation groups that are created on a regional basis or in
relation to a specific theme. In deciding whether or not to
act collectively with other investors, we take into account a
range of factors, such as:. whether or not collective engagement is likely to be
more effective than unilateral engagement.
. the degree to which the objectives of the other investors
are aligned to our own.
. the need for confidentiality.
. the context of the investee company and, exceptionally,
the wider economy.

To help us effectively participate in collective engagement,
we maintain good working relationships with otherinstitutional investors. We also support collaborative
engagements organised by representative bodies andothers, when these are aligned with our clients’ interests.
We work with a number of organisations in order toparticipate in collective engagement.

Climate Action 100+ (CA100+)
We are involved in CA100+, which is a collaborative
initiative between asset owners and managers toengage with high-carbon emitters. CA100+ has 3 goals
in encouraging companies to set clear targets to cut
carbon emissions in line with the Paris agreement to limit
warming to 1.5C, improve governance and oversightof climate related items and enhance climate related
financial disclosures and transition plans. abrdn engages
through CA100+ with several high carbon emitters andencourages those companies to align disclosure to theCA100+ Net Zero Benchmark. Phase 2 of the Net Zerobenchmark was launched last year. As part of Phase 2of the initiative, thematic engagements were introduced
and a commitment to publish them annually, increasetransparency and support investors to manage climate
related risks.

Stewardship Report 2023

Nature Action 100 (NA100)
We are involved in Nature Action 100, a global investor
engagement initiative focused on driving greater
corporate ambition and action on tackling nature loss andbiodiversity decline. We are engaging with companies in
key sectors that are deemed to be systemically importantin reversing nature and biodiversity loss by 2030.

Cumulative Voting in Brazil
abrdn is a member of Amec, a Brazilian organisation ofminority investors with membership of over 50 foreign anddomestic investors. Amec seeks to defend the rights ofminority shareholders in Brazilian publicly-held companies
by promoting good corporate governance practices.
Over several years there has been discussion between
investors, companies and regulators trying to resolve
challenges in the execution of cumulative voting.
Cumulative voting may be requested by shareholders
when electing the board of directors and is a system
whereby shareholders can cast all votes in favour of asingle candidate or divide votes across more candidates.
Historically, international investors experienced a numberof limitations to distribute votes in cumulative voting cases
due to system restrictions of the global proxy voting chain.
Due to these restrictions, some voting situations had to be
executed through manual voting which increased the risksof voting execution.
As part of Amec, a representative from abrdn took a leadrole in discussions with securities regulators, custodians,
the exchange, listed companies and other investors on this
topic to seek improvement. Our main contribution was toeducate the stakeholders in the local market about thecomplexities of proxy voting execution process for foreign
shareholders. As part of this we conducted several factfinding meetings with all the links in the proxy voting chain
to identify the pain points and bottlenecks. With that wewere able to present issues and engage with stakeholders
on potential solutions - some of which were implemented
by the regulator CVM and the B3 exchange. Following
improvements to systems within the proxy voting chain
made by the regulator and exchange, we were pleased
to note that in 2023 international shareholders were able
to have full voting power when voting in cumulative voting
situations in Brazil.

342023 Thematic
engagement example
Supporting a carbon transition throughour engagement
Net-zero stewardship: an engagement-led approach todecarbonisation
Active ownership is a powerful tool to mitigate financial
risks and to influence real-world decarbonisation. It allows
us to challenge companies on their transition strategies
and to influence corporate behaviour. Our proprietary‘credibility framework’ serves as a foundation tool for
us to pinpoint transition leaders. However, to conduct a
more proactive analysis, especially in regions with limited
data and disclosure gaps, an engagement-led approach
becomes imperative.
Our net-zero stewardship quantitatively assesses theintegrity of companies’ climate transition plans. It’s built on
the following indicators:. a company has a clear and transparent
decarbonisation plan;. policy support is favourable and supportive;. investments are made in net-zero enabling
technologies; and. the allocation for ‘green’ capital expenditure is

specifically dedicated to environmental initiatives.

How can active ownership help the
net-zero credibility gap?
abrdn’s active ownership encourages companies to
set credible targets and to enact changes in support ofclimate action. Active ownership also involves engaging
with businesses to encourage the appropriate level ofoversight by the board. This helps to manage climaterelated risks and allows us to gain an understanding ofsectoral and geographical nuances to decarbonisation.

Both data-driven and engagement-led approaches are
essential for a well-rounded assessment of a company’s
progress against its climate targets. In addition to
engagements, we assess quantitative information,such as the proportion of ‘green’ revenue, the scopeof a company’s targets, and the disclosure against
benchmarks (including Science-Based Target Initiative,
Climate Action 100+ and Transition Pathway Initiative).
But how do we hold companies accountable andmonitor progress? Active ownership involves keeping
track of progress, by setting milestones with each ofabrdn’s top-financed emitters. We assess progressagainst set milestones and determine whether thecompany has made sufficient progress to achieve theirclimate ambitions. We can escalate our concerns ina variety of ways, including revising our quantitative
assessment of a company, taking voting action, and bycollaborative engagement.

What does active ownership tell us?
Our active ownership research has identified the following
five key points.
1. Intensity targets hide the absolute truth
We identified that the majority of top-financed emitters
are using intensity targets rather than absolute emissions
reduction targets. Emissions intensity is often used a metricas it’s comparable with other companies and controlled
by a company’s size. However, it doesn’t always meanthat actual emissions are decreasing, as changes incapacity or energy output can affect the overall intensity
target outcome. As we aim to assess real world impact
on reducing emissions, we encourage companies to set
absolute reduction targets. Two of the emitters that weinvest in, CRH and Engie, have already adopted absolutetargets. We are now working with them on other climaterelated measures, such as improving their energy mix.

A standardised approach can be applied acrosssectors and geographies, and it allows us to measure
and compare the effectiveness of a company’s
decarbonisation progress with other heavy polluters.
Active ownership provides an in-depth analysis of acompany’s climate strategy, rather than relying on merely
third-party data or a principles-based approach on
climate issues. Our ownership approach assesses policy
support for clean energy, a company’s policy advocacy,
low-carbon substitutes, market appetite for low-carbon
products, and technology readiness in terms of barriers toentry and stage of development.

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35

2023 Thematic
engagement example
2. Targets need to cover direct and indirect emissions

5. Aligning pay with delivering climate targets

Companies must set comprehensive targets that cover
all emissions, with an additional focus on those that are
significant and most material. While many oil and gas
firms set short-term goals for direct emissions, they often
ignore the larger impact of indirect emissions. We expect
companies to identify material emissions to address thisgap and to support initiatives for standardised reportingand methodology. An excellent example is Siam Cement
Group (SCG), a chemical and cement company inThailand, which audited its full scope emissions with
the Science Based Target Initiative. It included Scope 3
emissions (indirect emissions) in its audit, despite them
representing less than 30% of its total emissions. We are
now working with the company to encourage it to reducethe clinker content (which releases CO2in production) of
its cement.

Lastly, we believe companies that are high financed
emitters should hold executives accountable bytying climate performance metrics with executive
remuneration. This holds executives accountable, andit incentivises them to take strategic action on climatechange. Our active ownership process encourages
detailed and long-term key performance indicators, which
focus on climate change. If these targets aren’t met, we
can vote against renumeration recommendations for key
executives.

3. Capital expenditure is a sign of commitment
Companies allocating capital expenditure towards‘green’ initiatives demonstrate a commitment to a netzero transition. However, the impact of such investmentson reducing emissions will take time. It depends on thecompany’s competency, expertise, and technologicalreadiness. For example, Ultratech Cement, one of thelargest cement companies in India, has set ambitious
clean energy targets. We are encouraging the company
to invest in new technology to electrify its kilns. We will
monitor its progress over the next three-to-four years.

Most companies in heavy-emitting industries have set
climate targets, but there are still gaps that may affecttheir credibility. We work closely with the companies weinvest in to encourage them to plug those gaps and to
make the changes needed to meet their targets. Our
influence as a large investor is significant. We recognise
our responsibility in holding companies accountableand driving positive change. We closely monitor
and track all the companies we invest in to ensure
they’re progressing towards their climate targets andreal-world decarbonisation

4. Policy support is needed
Policy support is essential for a credible transition to net
zero. Governments must enact policies that encourage
the shift towards clean energy. This helps to reduce longterm emissions and to minimise the reliance on fossil fuels.
At the same time, we work with our top-financed emitters– such as Total Energies, Shell and BP – to help them set
climate targets to reduce their methane emissions. We
monitor their progress, whilst also encouraging themto invest in low carbon solutions and alternative fuels
where feasible.

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36

2023 Thematic
engagement example
Employee Wellbeing in the Mining Industry
The mining industry is central to the economy of many
countries, global growth, and the transition to a low
carbon economy. However, the sector is often criticisedfor its social impacts. These have been centered on
unacceptable workplace behaviours, illustrated byincidence of sexual harassment and assault in Australia
and elsewhere in the world. From an investment
perspective, performance that fails to meet stakeholder
expectations can lead to operational disruption andreputational damage that can negatively affect investor
sentiment and asset values.
This, combined with concerns about environmental
degradation, have led some investors to exclude or divest
from all mining companies in the name of sustainability.
While this is understandable, this approach overlooks thefact that our future – which depends on renewable energy,
mobility, sustainable cities and a zero-carbon economy –relies on the availability of metals and minerals.
At abrdn, we recognise the challenge and complexitiesof this debate. In our view, constructive dialogue andengagement with the mining industry offers the best
opportunity to support safer workplaces and a just energy
transition. Over the last two years, we’ve undertaken
focused engagement with our larger mining holdings
to understand what actions they are taking to improve
performance in these areas and how we can help drivethat improvement.

Our key conclusion is that mining companies should use
all the tools they have available to them – governance,
performance incentives such as remuneration, oversight,
monitoring, and reporting – to improve workplace
behaviour, diversity, equity, and inclusion, and apply
the same rigour of existing health and safety regimes
to psychological safety. Many mining companies havedemonstrated a strong track record in improving healthand safety, embedding aspects into all areas of theirorganisational cultures and business processes. We
believe that employees’ psychological wellbeing warrants
a similar approach.
Taking this action is aligned with what the International
Council on Mining and Metals (ICMM), the global body that
represents one-third of the global industry, expects of its
members. Its Mining Principles place the same importanceon psychological and physical health and safety, including
action to eliminate all forms of harassment and unfair
discrimination and proactive steps to achieve gender
equity.
We believe that taking action to support employee
wellbeing is aligned with positive steps already being takenin the industry and will further help to improve workplace
behaviours and protect employees. Further, it will help
towards protecting the value of our investments by
avoiding the operational, reputation and legal fallout that
often accompanies poor performance.
In line with our collaborative approach, we’ve garneredsupport from a number of mining companies and theICMM. We are encouraged by this support and willcontinue these discussions in our ongoing engagement.

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37

Natural capital strategy

Within our Investment business,our belief is that understanding
and managing nature-basedrisks and opportunities can lead
to better investment decisions,and ultimately support client
objectives.
We aim to incorporate nature-related
considerations into our investment processusing six areas of focus:

Research and data
We aim to enhance our understanding of the implications of
unsustainable use of natural capital across our asset classes
and regions.

Investment integration
We aim to build upon and enhance the data and tools we use
to enable investment decision-making when considering thepreservation of natural capital.

Active ownership
We aim to better understand how investee companies
manage nature-related risks and opportunities and toencourage improvements.

Client solutions
We look to understand our clients’ expectations anddevelop investment solutions that can help deliver nature
positive outcomes.

The case for nature focused investing
Human activity has significantly altered land andmarine environments, impacting the ecosystemservices that underpin our societal and economic
needs. Critical dependencies and impacts related tonature have the potential to be financially material andinvestors need to understand risks and opportunities
associated with the use of natural capital. Climate andnature are interlinked and protecting and restoring
natural capital is essential to reach net zero.

Collaboration and influence
We collaborate with relevant industry associations andinitiatives, engaging with peers and policy makers to stimulate
improvements and best practices.

Disclosure
We will encourage better disclosure in line with therecommendations of the Taskforce on Nature-related
Financial Disclosures.

Application of our approach on nature to date:

2022
2021

TNFD launched, and abrdn
joined the TNFD Forum.

2022

2023

Published our first whitepapers
on biodiversity loss.

Presented at a TNFD
piloting clinic.

Signed the Finance for
Biodiversity Pledge.

Published our position
statement on deforestation.

First reviewed data solutions
providers.

Published our deforestation
white paper.

Participated in pilots of the
TNFD LEAP framework.

Initial trial of ENCORE tool
to assess portfolio-level
exposures.

Published our approach to
Natural Capital.

2024

Intention to develop active
engagement frameworkfor nature.

Joined Nature Action 100.
Published our approachto TNFD.

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38

Actions and insight

Biodiversity ‘net gain’ in the UK
Focus on implications of regulation for investment
real estate.
From 2024, developments such as housing, commercial
buildings, and smaller infrastructure projects in England
will need to deliver a ‘net positive’ biodiversity impact fromproject development. In practice this means developers
will need to develop habitats and green spaces. This caneither be at the project site, or through purchased private,or statutory credits.
This presents both risks and opportunities for investors.
For example, developers could incur additional costs, withlandowners potentially being positioned to benefit from an
option to create ‘habitat banks’ to be sold as biodiversity
credits. Our investment real estate approach considers thepotential impacts on nature across both the construction
and use phase of an asset’s lifecycle. We are alert to theneed to mitigate negative impacts to nature and continue
to develop our approach to enhancing local biodiversity atboth development and standing assets.

Case study

Case study
Piloting ‘net gain’ for new developments
Our real estate team has worked with DEFRA on
pilot projects so as to provide feedback on live
regulatory updates using developments from ourfunds. For instance, when converting an intensive
cattle pasture to a 62,000 square feet parcel
delivery hub, we could not enhance biodiversity at
ground level, despite retaining trees and hedgerows.
Instead, we incorporated a green roof when
designing the delivery hub. This incurred a cost
but avoided the purchase of biodiversity credits
for the project, which under the regulation would
be a greater expense. Despite the additional cost,
we delivered a biodiversity uplift on-site, without
needing to purchase biodiversity credits.

Research and insights
Further reading available on our website.
Preserving Natural Capital – Our approach for investments

Solutions for nature-related data
One of the primary challenges for investors isaccess to high quality data, with disclosure on
nature still emergent. This is a particular challenge
for metrics such as land use change, water stress
exposure, and non-GHG air pollutants. We expect
to see changes over time, driven by regulatory
frameworks, but for investors looking to fully
assess portfolio-level risks and opportunities,
currently, there are limited solutions. During 2022
and 2023, we mapped the current market for
data, footprinting, and geospatial data providers
to understand how, as investors, we could accessquality nature-related data. Despite an array of
existing and emerging providers, our assessment
is that there is insufficient coverage for the entire
range of data we need. This is nonetheless a rapidly
evolving space and there is now sufficient data to
begin identifying potential risks and opportunities inour portfolios.

Stewardship Report 2023

Biodiversity Loss – Introducing the next environmental crisis
Biodiversity Loss – Impossible for investors to ignore
Nature as a climate solution
Deforestation – Why it matters for investors

39

Stewardship acrossasset classes
High-quality research, including the understanding of ESG
factors, forms the basis of all the investment decisions
we make. Our investment teams and Investments
Sustainability Group carry out detailed thematic analysis
to fully understand the investments we are making,creating a detailed knowledge of:. all financial and business drivers and metrics.
. the risks and opportunities that impact on thesebusiness drivers and metrics, including those that relate
to ESG factors.

. the mitigating actions taken to address these risks.
This helps us to make better investment decisions, leading
to better outcomes for our clients.
In general, we believe that three to five years is theappropriate time horizon for the evaluation of investment
performance. Over the course of the market cycle wewould typically expect some mean reversion in markets- market leadership would change and fundamentals
would prevail to the aggregate benefit of our investments.
Each of our asset class teams operate a proprietaryassessment of ESG factors within their investment process.

ESG House Score
In addition to the assessments for public companies thatthe various asset classes conduct, we have built our own
proprietary ESG House Score which draws on available
data for 140 key performance indicators (KPIs), while
also integrating the views of our in-house analysts. These
KPIs are arranged in categories aligned with frameworks
such as Sustainable Accounting Standards Board(SASB) and the UNGC. These KPIs allow us to assess therelative performance of each company against theirpeers in the same sector and to highlight any potential

Stewardship Report 2023

areas of risk to our investment and the impact on client
portfolios. Our proprietary methodology aggregates the
KPIs for each company into an overall score and allows
us to include an ESG risk assessment in our investment
decision-making process, drive engagement withcompanies and analyse progress by monitoring thesescores over time either at company, portfolio, fundrange or entity level. Using our ESG House Score, we cancompare how companies around the globe manage
ESG issues. The output makes it easier to spot the ESG
leaders and laggards in each sector. We are developinga methodology for identifying a Sustainable Investment
for our funds, which works alongside our other scoresand tools.
For more information on our ESG House Score please see
our website.
Below we describe the high-level stewardship activities ofdifferent asset types. These are used as a baseline acrossall of our different funds and geographies. For certain
segregated mandates and funds which address
specific sustainability criteria we may provide additional
investment screening or engagement activities, as definedin any contractual documents.
Our approach can vary between asset classes as a resultof the different rights available. For example, for listedcompany equity holdings shareholders have voting rights.
In addition, governance constructs, regulatory drivers andcompany responsiveness can vary by geography, but due
to our extensive regional resource we are generally able toengage in all regions using the same methodology.

40Equities

Our Equities teams operate a proprietary ESG scoring
system called the ESG Quality Score (ESG Q Score).
This considers the regional universe and peer group inwhich a company operates, and allocates companies ascore between 1 and 5. This is applied across every stock
covered globally. Examples of each category and a small
sample of our criteria are detailed below.

Our interaction with clients has indicated that theconsideration of ESG factors as part of our investment
processes, and the impact on the investments we makeon their behalf, is important to them. We therefore include
this information in our regular monitoring metrics thatcompare the ESG metrics for our investments against
those of relevant benchmark investments.

No active investment is allowed into companies that are
rated 5 unless special dispensation is provided by therelevant Head of Desk. Any dispensation given will consider
the nature of any adverse impact of the investment prior
to approval.

Equities ESG Q Score
Best in class1

Exceptional ESG risk management.
Business is taking advantage of ESG opportunities and enhancing its competitive advantage.
Strong oversight and governance with robust control mechanisms.

2

Above averageStrong ESG risk management and/or utilising ESG factors to improve competitive advantage. But execution not as progressed as bestin class peers.
Strong oversight and governance with robust control mechanisms.
Average3

Business has identified material ESG factors. There may be instances of policy or process failure in recent history but these havebeen addressed.
Opportunities to enhance competitive advantage identified but still nascent.
Governance and oversight more limited or lacking strong check and challenge.

4

Below average
Material ESG risks are under-managed and opportunities under-developed.
Lack of robust processes in place, with serious potential for something to go wrong and severely impact the investment case.
Laggard5

Business has likely had significant issues arise due to lack of processes and oversight.
Failure to properly manage most material ESG factors and no evidence of effort to address.
Significant risk to the investment case from poor management of ESG risks and failure to capture revenue opportunities.

Region

5

4

3

2

1

Total

Asia Pac ex Japan

1

13

248

123

10

395

Europe

0

5

38

61

7

111

GEM ex Asia

0

5

25

20

6

56

Japan

0

1

59

45

4

109

North America

0

7

106

94

13

220

Small Cap

0

0

21

59

12

92

UK

0

20

82

67

8

177

Total

1

51

579

469

60

1,160

Source: abrdn, December 2023.

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41

Fixed income

Our credit profile is specific and represents how impactful
we believe ESG risks are likely to be to the credit qualityof the issuer now and in the future. Our analysts utilise
an ESG Risk Rating framework to support making theseassessments. This is a proprietary tool designed to help
focus the knowledge and expertise of credit analysts in asystematic way and to substantiate the overall ESG Risk
Rating assigned to debt issuers.
We actively engage with companies in which we are or
may become an asset owner. Engagement provides
a forward-looking view on the management of ESG
risks, opportunities, and the ability to encourage valueenhancing best practice standards. In our research andanalysis of ESG issues, we identify any concerns we may
wish to discuss. We then set engagement objectives
according to the circumstances of each debt issuer.
These objectives may include enhancing our knowledge,
setting milestones to encourage best practice or to identify
leaders and laggards on any given ESG topic.
Our Developed Market (DM) and Emerging Market (EM)Sovereign teams utilise separately developed proprietarymodels which assess the performance of a country’s
ESGP factors, where P stands for politics, highlighting
the importance of political drivers in sovereign analysis.
Although there are a number of common data sources
within these tools, DM and EM models are tailored torepresent the different dynamics of each asset class. This
generates better peer comparisons and therefore more
impactful insights for investment decision making.

In the sovereign space, it can be difficult to set milestones
on issues such as climate policy due to: 1) lack of access to
the relevant policy decision makers and 2) inherent politics.
However sovereigns regularly seek feedback on theirlabelled bond frameworks and here we can play a much
more active role in shaping outcomes. Given the relatively
low levels of individual investor influence in the sovereign
debt market, collaborative engagements play a vital role
when engaging with sovereigns.
Engagement activities in Private Credit can be split into
two stages of the process:. Initial due diligence & underwriting prior to investment. Ongoing monitoring of the investment
During the initial due diligence phase we engage tounderstand the risk and opportunities the underlying
assets or companies are exposed to. We may do thisvia direct conversations with management or technicaladvisors where applicable e.g. in Commercial Real
Estate debt we will have access to specialist environment
reports. Our greatest ability to set milestones for ourborrowers occurs prior to investment where we may
be able to negotiate certain ESG KPIs, ESG reporting orother ESG related structuring requirements into the legal
documentation governing the investment. Following initialinvestment, there are regular opportunities to engage withmanagement and where material, will be discussed aspart of this ongoing dialogue.

We see engagement with sovereigns as a useful way
to support governments in formulating sustainable
policies and adopting best practices, to achieve justand sustainable development, while being cognisant ofpolitical sensitivities. Engagement also allows us to gaina better understanding of the investment risks posed byenvironmental, social and governance factors affecting
a country. Sovereign engagements may be held with avariety of different sovereign stakeholders including anation’s Debt Management Office, Central Bank or Ministryof Finance.

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42

Real estateWithin abrdn’s real estate business, abrdn has both direct
and indirect investments and thus the engagement
approach differs depending on the real estate
sub-asset class.
Indirect real estate investments can be executed in two
ways. The first is through our real estate multi-manager(REMM) team, where we invest into unlisted third party realestate funds. The second is through our listed real estate
team, where we invest into quoted real estate companies
which follows a similar engagement process to ourequities business.
Direct real estate investments are when abrdn actively
buys, manages and sells real estate assets on behalf of
our investors.
This section outlines the engagement approach for bothindirect real estate where we invest through an externalmanager into an external fund and direct real estate.

Indirect - real estate multi-manager
As described above, the indirect real estate multimanager (REMM) investments are into external real estate
funds managed by external investment managers.
ESG factors are taken into consideration in the investment
process leveraging the three key intervention points
below. These three stages allow for interaction with theunderlying managers and the opportunity to engage on
ESG specific items:
1. Allocation
2. Selection
3. Management

Allocation
The starting point to any product is an open andtransparent discussion with the client to understandthe investment objectives, aspirations, and decide theinvestment parameters including consideration of
bespoke ESG criteria and risk tolerance. We believe thatan open discussion is an important first step to building
a relationship with our clients, and that a transparent
process on an on-going basis is necessary for a successful
long-term partnership.

Selection
The key intervention points when selecting a real estate
portfolio and investment manager apply on (1) Screening
and (2) through due diligence which populates theInvestment committee memo for discussion at theInvestment Committee (IC).
1. Screening: In order to screen potential investments, theREMM team have a screening guidance document
which outlines the screening process. This includes ESG
guidance which require the ESG specific questions to beanswered alongside the other screening criteria in orderto determine whether to proceed with the investment:
2. Due diligence for IC: For IC approval relating to
new investments, there is a two-stage IC decisionmaking process (i.e. Stage 1 and Stage 2 Investment
Committee). A representative of the Real Estate ESG
team sits within the REMM Investment Committee,
to provide feedback. As part of the IC process:a. The REMM ESG Questionnaire should be completed
by the Underlying Investment manager prior to the IC1
meeting, with a summary of the responses detailed in
the ESG section along with material risks and mitigantssummarised within the Investment Memo. The
questionnaire is shared with the Real Estate ESG team
before the IC1 Meeting.
b. There is a dedicated section in the Investment Memoon ESG matters, which includes a summary of a fund/firm’s ESG policies, scores, and issues. This also includes
external ESG data provided by the managers (e.g.,
GRESB scores, UNPRI assessment results etc.).

Management
ESG consideration and analysis is carried out throughthe management of existing investments through (1)Annual manager ESG survey (2) ESG data request and(3) Investment plans including a holistic ESG risk andreview process. The key opportunities to engage with
underlying managers occur in the first two steps.

Once the investment objectives and ESG parameters areagreed, we will begin portfolio construction, where we
incorporate the macro views of our Real Estate Researchand Investment Strategy team.

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43

Real estate

1. Annual Manager ESG survey: Underlying Investment
managers are asked to complete an ESG Questionnaire
which focuses on understanding its adherence toindustry principles, evolvement of ESG policies and key
ESG risks of the investment and how they are being
addressed. Based on that analysis each fund gets a
ESG Score:. Maintain: REMM team is satisfied with the underlying
manager’s reporting and policies – no further action
required. Monitor: REMM team will monitor the underlying
investment over the coming months in regard to their
ESG reporting. Engage: REMM team will actively engage withthe underlying investment manager to discuss
improvements to their ESG approach and reporting.

The REMM team reviews the ratings annually and update
the ratings as appropriate based on discussions withthe underlying managers and GRESB scores whereapplicable. This is then passed by a member of the ESG RE
team to provide final approval and comment.
2. ESG data request: An ESG data request is sent out
quarterly in order to provide a more quantitative
ESG data set for the underlying investment manager
and funds.

Stewardship Report 2023

Direct real estate
abrdn believes that comprehensive assessment of ESG
factors, combined with constructive engagement, may
lead to better investment outcomes. Specifically, ESG is afundamental part of the way in which abrdn thinks about
real estate investments. It forms an integral part of ourinvestment process and is analysed alongside all othermaterial issues.
Our real estate ESG approach groups material
sustainability indicators into four main categories:. Environment & Climate,. Demographics;. Governance & Engagement; and. Technology & Infrastructure.
This approach allows the identification and promotion(where relevant) of material ESG risks and opportunities
relevant to a fund’s investment strategy, sector andgeography. These guide the prioritisation and integrationof ESG factors at the fund and asset level, while providing
a structure for engagement with, and reportingto stakeholders.

44Real estate

Our ESG approach

Real estate material ESG indicators

PlanetPeopleProcess

Progress

Environment andclimate change

Demographics

Governance andengagement

Technology andinfrastructure

Biodiversity

Vulnerability & inclusion

Diversity & labour rights

Digital connectivity

Land and watercontamination

Affordability

Occupier engagement

Physical connectivity

Accessibility andexperience

Occupier quality

Smart connectivity

Outdoor air quality
Noise pollution
Public realm &cultural value

Employment, skills
and enterprisePartnerships

Occupier wellbeing

Carbon and energy
reduction
Water efficiency
Waste and circularity
Climate resilience

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45

Integration acrossasset classes
Further to the asset classes detailed previously, we highlight the work of our Private Equity and Quantitative Index
Strategies teams.

Private Equity
Our Private Equity team believe that ESG factors arefinancially material and can impact a company’s
performance – either positively or negatively.
Understanding ESG risks and opportunities, alongsideother financial metrics, is therefore an intrinsic part of ourresearch process.
We actively engage with the companies in which weinvest with a top-down Portfolio Construction Committee
assessment of ESG risks by country. We screen out
pipeline opportunities that do not fit with our ESG focus
and objective and combine this with the insights of
our investment managers, ESG equity analysts andInvestments Sustainability Group. This comprehensive
approach means we can build a richer, more holistic
view of each company. It also means we can consistently
evaluate one company against another.
This is all part of our responsible stewardship of our clients’assets – helping us mitigate risks, unlock opportunities andenhance potential long-term returns.

Quantitative Index Strategies
Our Quantitative Index Strategies (QIS) have provided
indexation and rules-based solutions since its inception
in 2005. QIS has a full range of equity and fixed income
strategies. ESG is part of investment decision making and
QIS believe that it should be assessed simultaneously withfinancial considerations. This helps to promote competitive
financial returns, mitigate associated risks and improve
ESG outcomes. QIS recently passed a significant milestone
for UK investors with the Sustainable Index range passing
the £20 billion AUM mark. This is all the more impressive
given the Sustainable Index range only launched 3 years
ago in 2020.

Stewardship Report 2023

ESG integration needs to be tailored to customer
requirements, as different customers have different risk
& return requirements and also different ESG objectives.
Sustainable indexation aims to deliver sustainableimprovements while keeping the benefits of passive
investing. The aim is to generate long-term returns by
replicating the risk and return profile of customised
indices that target broad sustainable improvements.
Some examples of broad sustainable improvements
could include higher exposure to ESG scores, lower
exposure to carbon emissions or higher exposure togreen revenues. We focus on minimising long-term risks
associated with ESG and climate as well as leveraging
on opportunities arising from the transition to cleaner
technologies. Our customised indices have been designedby abrdn in partnership with the calculation agent MSCI,a global leader in index design and provision of ESG data
and analytics.
As long-term holders of capital in our index business andas a large active manager, we have an important roleto play in driving better ESG behaviours. We seek to be
active stewards of every investment we make and to bea global leader in ESG investment. Active voting is applied
across all our Equity index funds, with direct engagement
considered on a case-by-case basis.
On the following pages there are some examples of ourengagement over the year, as well as further detail on our
voting process and activity.

46

2023 Company
engagement examples
Ultratech Cement
Region: Asia
Topics discussed: Green energy mix, cement
decarbonisation, verification of emissions reductions
targets
Ultratech Cement is the largest cement producer in India
and abrdn’s number one top financed emitter. Cement
is hard to decarbonise, given traditional cement kiln
manufacturing produces a substantial amount of CO2e
known as process emissions. Ultratech Cement is studying
electrification of the cement kiln heating process andis using alternate fuels in combustion and production
processes to replace fossil fuels.
Our requests:
We encouraged Ultratech Cement to increase its share of
renewable energy and to make sufficient progress against
its target to reach 34% of renewable energy capacity by
2024.

Outcomes:. The company has announced more renewable energy
targets and aims to increase the overall share of green
energy mix to 85% by 2030. Currently, green energy
represents 22% of its total energy mix and is making
positive progress to achieving its target.

. Ultratech Cement approved its emission reduction
targets with SBTi, among the first Indian cementcompanies to do so.
. Ultratech Cement has formed a partnership with

Coolbrook to develop Roto Dynamic Heater technology.
This technology to electrify kilns is still in early stages ofresearch and development and is approximately 3 to 5
years away from a break-through.

. We are pleased with the progress the company has
made to reach its net zero targets despite being in adifficult to decarbonise sector.

We also encouraged the company to verify its emission
reduction targets with the Science Based Target Initiative(SBTi), where emissions are most material.

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47

2023 Company
engagement examples
Grupo Mexico
Region: Emerging Markets
Topics discussed: Corporate Governance, Capital
Allocation, ESG Disclosure, Mining Standards
Grupo Mexico is a multi-industry company that operates
through mining, transportation and infrastructure divisions.
The company had a mixed track record when it comes to
ESG. It had a series of E&S controversies at certain sites.
We have seen positive developments in the company’s
culture but continue to see room for improvement.
Our requests:
During 2023 Grupo Mexico was involved in headlines as
one of the potential buyers for Citi’s sale of Mexican bankBanamex. We engaged with the company regarding
this matter to emphasize the importance of proper
diligence on capital allocation strategy as we believed adiversification to the banking sector would be detrimental
to the overall business. In May 2023 we had the opportunity
to engage with the company on corporate governance,emphasising the importance of adopting best practices,
including access to management and board members,
as well as diligence on capital allocation, in light of thepotential acquisition at that time. In our engagements with
Grupo Mexico we also had the opportunity to highlight theimportance of continuing their E&S initiatives within thecompany, which includes improved disclosure on ESG andalignment with global best practices on mining.

Stewardship Report 2023

Outcomes:. Despite not being members of ICMM yet, the company
has begun adherence to the Copper Mark, and manysites have already achieved the certification, which
signals a forward momentum. In addition, the company
utilises requirements from ICMM across several high-riskareas such as tailing dams and water stewardship.
. While many advancements have been done at theholding level regarding E&S, we still see potential forfurther improvement within the subsidiary, Southern
Copper, with adoption of global best practices of mining
such as ICMM, and better disclosure. Southern Copper
is penalized by ESG rating agencies such as MSCI due its
poor disclosure. We will monitor ongoing progress, andat future meetings with the company push for greater
progress at asset level with Southern Copper Company.

. Grupo Mexico has been involved in E&S controversies
in the past, which led to a negative initial quality
assessment. Through our engagement process we wereable to get a clearer understanding of the company’s
approach to E&S and operational practices, which
led to an improved view on quality. By engaging withthe company we were also able to voice the investor
concerns and help promote the ESG agenda within thecompany’s governance bodies.
. The company has improved the operational standardsof multiple assets, adhering to the Copper Mark, andimproved ESG disclosure as well. Greater integration ofthese factors has built a greater appreciation of holistic
quality and were able to maintain our investment.

48

2023 Company
engagement examples
Enel
Region: Europe
Topics discussed: Decarbonisation strategy
abrdn engaged with Enel during 2023 to discuss theCompany’s decarbonisation strategy, primarily as a lead
investor of the CA100+ coalition.
Our requests:
We consider Enel’s decarbonisation strategy to be industry
leading; Enel is phasing out all coal power generationin 3 years, expects more than 80% of gross capex to bealigned to the EU Taxonomy between 2024-26 and has
set a 1.5°C verified Science-Based Target to achieve
zero emissions by 2040. However, the CA100+ investor
group has identified a handful of areas where Enel’s
decarbonisation strategy and disclosures can be further
strengthened in order to once again achieve full alignment
to the Climate Action 100+ Net-zero Benchmark.
For instance, further clarification can be given on theuse of offsets, climate governance and just transition.

Outcomes:. At Enel’s CMD in November 2023, the company
reiterated its commitment to a 1.5 °C decarbonisation
pathway and to create shareholder value by growing
the renewable power business.
. Enel had previously become the first company tocomply with all indicators in 2022.
. In 2023 Enel made further changes to its Long Term
Incentive Plan (LTIP). This included increasing theweighting of carbon emissions reductions from
10% to 15%. In addition, a scope 3 emissions target
was added to the plan. These were both changes
abrdn had requested in previous engagements andwe were comfortable to vote in favour of the LTIP at
the 2023 AGM.
. The investor group will continue to support Enel towards
full compliance with the indicators of the CA100+
Benchmark Assessment.

In 2023, we also engaged and collaborated with otherstakeholders prior to Enel’s AGM, which was dominatedby significant board and managerial change. Following
the AGM, we met with members of the incoming
management team and underlined our strong support
for Enel’s decarbonisation strategy and carbon reduction
commitments.

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49

2023 Company
engagement examples
Standard Chartered
Region: UK

Outcomes:

Topics discussed: Sustainable finance, diversity equity,and inclusion, financed emissions

We were encouraged to see that in the company’s 2022
reporting they had started disclosing in absolute terms
their sustainable finance income and sustainable financemobilised. This should help investors start to evaluate
progress towards the bank’s goals, the key drivers, andcomparisons with peers. We will continue to urge thebanks to elaborate more on the operational changes
they are implementing in order to achieve the sustainablefinance opportunities identified.

During 2023 we conducted thematic engagements withmajor banks in our portfolio. We have observed that global
banks such as Standard Chartered have stated thatsustainable finance is central to their growth ambitions.
Standard Chartered has set targets to mobilise $300billion
for green and transition finance from 2021 through to 2030
and to reach $1billion of income from sustainable financein the medium term.
Our requests:
We communicated to the bank that we would value
additional transparency in relation to absolute numbers
for Standard Chartered’s sustainable finance activities aswell as on the company’s thinking behind its sustainablefinance targets, on the basis that this would potentiallyhelp us, and the wider market better understandhow the company is positioning itself to benefit fromthese opportunities.

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50

2023 Company
engagement examples
ExxonMobil
Region: USA

Outcomes:

Topics discussed: Board composition, board diversity, M&A,
net zero targets, tax transparency and emissions reduction
targets, Scope 3

We voted against the Chair of the Nomination Committee
at the company’s 2023 AGM, due to our concerns
regarding the gender diversity of the board. The following
month, ExxonMobil announced the appointment of a newfemale director raising representation at board level from
25% to 33%.

ExxonMobil Corporation is an American multinational
oil and gas corporation. We engaged with ExxonMobilon several issues ranging from board composition
and remuneration to topics of climate change such as
emission reduction targets and green capital expenditure.
Our requests:
Following our 2023 AGM vote, we encouraged thecompany to achieve at least 30% of female directors on
the board. In addition, we encouraged the separation ofroles of CEO and Chair and applauded the company for
its ethnic board diversity figure for being 38%.
We addressed the impact of ExxonMobil’s largest
acquisition since the 1990s of Pioneer Natural Resourceson its net zero targets. We encourage the company to
set a Scope 3 target and to strengthen tax transparency
report, given regulatory pressure and to align closer to
global oil and gas peers.

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51

2023 Company
engagement examples
Government of Hungary
Region: Europe
Topics discussed: Green Bond Framework
abrdn has been engaging with Hungary’s debt
management agency for a number of years and thecountry published its first green bond framework in 2020.
Our requests:
In early 2023, abrdn set a number of milestones to be
implemented in Hungary’s green bond post-issuanceallocation reporting and when the country looked torenew its green bond framework. Milestones included
placing increased focus on additionality via capital
expenditures rather than operational expenditures
spend particularly on its rail network (initial framework
was largely allocated towards operational expenditures
for its rail network) and reporting projects in line with EU
Taxonomy guidelines.

Outcomes:. In July 2023, Hungary published a renewed green bondframework with much better EU Taxonomy alignment
reporting.
. In a subsequent meeting with Hungary’s State Secretaryfor Energy and Climate and its Debt Management
Agency, they also confirmed there would be anincreased focus on capital expenditure across green
bond project categories which includes cleantransportation, energy efficiency and renewableenergy projects.

“Increased focus on
capital expenditureacross green bondproject categories
which includes
clean transportation,energy efficiency andrenewable energy
projects.”

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52

Exercising
Rights andResponsibilities
Proxy voting is an integral part of our active ownership approach and isclosely linked to our engagement activities, particularly as an escalation
tool. We believe that voting at company meetings is one of our mostimportant activities when investing on behalf of our clients, and we seek
to exercise voting rights in a manner in line with their best interests. We
therefore take great care to set high expectations in our voting policies, andassess resolutions at the meetings of companies in which we actively invest.

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53

Proxy Voting

In line with our active ownership approach, we review
the majority of general meeting agendas convened bycompanies which are held in our active equity portfolios.
Analysis is undertaken by a member of our regional
investment teams or our Active Ownership team and votes
instructed following consideration of our policies, our viewsof the company and our investment insights. To enhance
our analysis we may engage with a company prior tovoting to understand additional context and explanations,particularly where there is deviation from what we believe
to be best practice.
To supplement our own analysis we make use of thebenchmark research and recommendations provided
by ISS, a provider of proxy voting services. In the UK we
also make use of the Investment Association’s Institutional
Voting Information Service (IVIS). We have implemented
regional voting policy guidelines with ISS which ISS applies
to all meetings in order to produce customised voterecommendations. These custom recommendations
help identify resolutions which deviate from our
expectations. They are also used to determine votes
where a company is held only in quant funds. Within ourcustom policies, however, we do specify numerous
resolutions which should be referred to us for active review.
For example we will analyse all proposals we identify asenvironmental or social proposals. For those companies
which we hold in our actively managed funds, we use
the recommendations and research provided by ISS andIVIS as an input to our own analysis of resolutions prior to
making final voting decisions. We instruct the same voting
outcome across all of our funds for each holding. Analysing
the research provided for our active positions allows us tomonitor the quality of the research provided.
On an annual basis, ISS reviews its benchmark policy
guidelines which it uses when undertaking its research andproviding its voting recommendations. Its review is driven
by its own analysis of market views and input received
from its customers. We play an active role in giving ourviews on the development of the ISS benchmark voting
policies. In addition, we undertake an annual review ofour own custom voting policies. This review is undertakenby the Active Ownership team in conjunction with theregional public markets teams. In conducting our policy
review we consider regulatory changes, developments inmarket practice or expectations and the evolution of ourown views. Throughout the year we also actively engage
with clients to seek input to voting policy development.

Stewardship Report 2023

So that clients and companies are clear about the policies
which will drive our voting decisions, we publish our Listed
Company ESG Principles & Voting Policies on our website.
This document provides details of our expectations of
key aspects of a company’s handling of matters that areimportant to our views as an investor. Detail is also provided
on our voting policies in respect of a variety of governance,
environmental and social topics.
As we believe that voting is a key component of the
stewardship activities which are integral to our investment
approach, it is our preference that our clients appoint us
to make voting decisions for the holdings in the funds wemanage on their behalf. For larger segregated clients
we may accept arrangements where the client instructs
voting decisions separately. We will make voting decisions
according to our policies for companies held within thepooled funds we offer to clients. As well as describing
our views in our Listed Company ESG Principles & Voting
Policies document we disclose all voting outcomes on
our website on the day following a general meeting.
This disclosure includes a rationale for:. votes against management recommendations.
. votes relating to environmental and social matters.
. votes instructed differently from our custom policy
recommendations.
While it is most common for us to vote in line with a board’s
voting recommendation we will vote our clients’ sharesagainst resolutions which we believe are not consistent
with their best interests. We may also vote against
resolutions which conflict with local governance guidelines,
such as the Investment Association in the UK – of which
we are an active member. Although we seek to voteeither in favour or against a resolution we do make use ofan abstain vote where this is considered appropriate. For
example we may use an abstention to acknowledge some
improvement, but as a means to reserve our position in
expectation that further improvement is needed before
we can vote in favour. Where we vote against a resolution
we endeavour to inform companies of our rationale. In
exceptional circumstances we may attend and speakat a shareholder meeting to reinforce our views to thecompany’s board.

54

Proxy Voting

We endeavour to vote all shares globally for which wehave voting authority. The exceptions are when we areotherwise instructed by the beneficial owner, where asignificant conflict exists or where, for practical reasons
such as share-blocking, this is not appropriate. In 2023
we voted at 97% of meetings for which we were eligible.
The meetings for which we elected not to vote were due
to: conflicts of interest, such as in-house OEICs and SICAVs;
shareblocking restrictions, which would have impacted
liquidity in the lead-up to the meeting; and positions
which we had exited after the record date but prior tothe meeting.
We have a robust fund launch process whereby ourinternal Proxy Voting team is notified of any new fund forwhich we have been delegated voting rights. The teamwill arrange for the appropriate set-up between the fundcustodian and our proxy voting service provider to ensurethat ballots for the fund are received going forward.
As a key supplier and outsourcer, we apply our corporate
supplier risk analysis and due diligence processes to ourarrangements with ISS. Our contract with ISS has beenrenewed every two years and, as part of the renewal,
we review all contractual arrangements to ensure thatthey meet with the regulatory requirements for our
global operations.
There are a number of facets to the ISS service whichenable us to vote at company meetings in an efficient andeffective manner, including:. the collection of notifications of all general meetings at
which we are eligible to vote.
. the provision of these notifications to us with an analysisof the resolutions and recommendations of how to vote,based on ISS benchmark and abrdn custom policies.

. the mechanism by which our voting decision istransmitted to the company.
. a data repository of all of our voting decisions which canbe used for our own research and reporting to clients.

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55

Voting on environmental
and social resolutions
Resolutions concerning environmental and social issues
have become more prominent at company meetings.
Some of the most prevalent themes are climate change,
diversity, equity, and inclusion, lobbying and politicalcontributions, and employment practices. We endeavour
to review any resolution at a company meeting that we
identify as covering environmental and social factors.
Our approach to analysis of these votes is consistentacross active and quantitative investment strategies:. Review the resolution, proponent and board statements,
existing disclosures, and external research.
. Engage with the company, proponents, and otherstakeholders as required.

. Involve thematic experts, regional specialists, andinvestment analysts in decision-making to harness awide range of expertise and include all material factors
in our analysis.
. Ensure consistency by using in-house guidance to framecase-by-case analysis.
. Monitor the outcomes of votes.
. Follow-up with on-going engagement as required.

Given the nature of the topics covered by these resolutions
we do not apply binary voting policies. We adopt a
nuanced approach to our voting research and outcomes
and will consider the specific circumstances of thecompany concerned. Our objective is not to vote in favourof all shareholder resolutions but to determine the best
outcome for the company in the context of the best
outcome for our clients.

Our interest is the long-term and sustainable growth of
our clients’ capital. This is why our approach to voting
on environmental and social resolutions involves caseby-case analysis and draws on a range of internal andexternal research and expertise.

Say on Climate
Resolutions on environmental and social issues are
typically filed by shareholders but they can also be tabled
by company management. Most management proposalsof this nature are ‘Say on Climate’ resolutions.
These resolutions ask shareholders to cast advisory votes
on a company’s climate strategy. Although these votes
are well intentioned, when shareholders support a Say on
Climate vote it may limit scope for subsequent challenge.
Presenting the climate strategy as a standalone item alsorisks diminishing the integration of climate in strategy andthe direct responsibility and accountability of the board
and individual directors.
We have therefore decided to abstain on Say on Climate
resolutions. We believe targeted engagement, like ourthematic Net Zero engagement detailed on pages
35-36, and other voting mechanisms, including our
climate oversight voting policy utilising CDP data, offer
a more effective way to work with companies on theirclimate oversight.

We are supportive of the steps being taken bycompanies to provide transparent, detailed reportingof their ESG strategies and targets. Well draftedenvironmental and social resolutions can enhance thisreporting, hold management to account on important
issues, and protect value for investors. They areclear, unambiguous, focused on financially material
issues, and tailored to a company’s circumstances.
They encourage improvement without unduly constraining
the agency of the board. However, many resolutions do
not withstand closer analysis. For example, some request
action that is already addressed by existing commitments,
disclosure and practices, while others fail to account forgovernance implications. In our view, such resolutions do
not merit support.

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56

Voting process

Reseach and voting
recommendatios
provided by proxyadviser – ISS

Listed Company
ESG Principles &Voting Policies

Annually reviewed regionalcustom voting policies

6

Disclosure of all
voting outcomeswith rationales
for votes against
management andvotes contrary tocustom policy

Engagement withcompanies as
required

Assessment of actively
held6 meeting resolutions
by abrdn analyst

Final voting decision
instructed

Quant only holdings are voted in line with custom voting recommendations, with certain exceptions where Active Ownership will review and instruct.

On the following pages are some examples of how voting is applied in action.

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57

2023 Voting
Case Studies
Centrica

YouGov

Region: UK

Region: UK

Vote topic: Executive Remuneration

Vote topic: CEO to Chair role move

Background:

Background:Centrica is the owner of British Gas, and is a member of
the FTSE100. In 2020 the company granted a Long Term
Incentive (LTI) share award to executives. While the normal
award limit was 300% of salary, awards were granted at250% of salary which was consistent with 2019 grants.
We were of the view that full awards would not have been
appropriate in the context of performance. As a result ofmarket-wide decline in share prices due to the Covid-19
pandemic the number of shares granted was higher thanprevious years. It was therefore our expectation that, inthe event of a recovery, the Remuneration Committee
would use discretion to reduce the vested shares at theend of the performance period in December 2022 to avoid‘windfall gains’. At the time of vesting, the performance
shares were worth £2.6m (over 300% of salary). We
were of the view that there were windfall gains and weredisappointed that the LTI was not reduced.

In August 2023, the company appointed a new Chief
Executive Officer (CEO) and the former CEO became
non-executive Chair. We are not generally supportive of
the move of a retiring CEO to the role of Chair.

In addition to concerns regarding the vested LTI, wenoted that the Remuneration Committee awarded the
CEO a generous annual bonus of £1.42m for 2022. We
did not think this award was reflective of the impact offorced prepayment installations on vulnerable customers
during the ongoing cost of living crisis and the probe
by Ofgem. We were concerned that the Remuneration
Committee’s decisions were harmful to the reputationof the company and failed to reflect the experience ofvulnerable customers.
Action:Action:Ahead of the company’s AGM we engaged with theCompany Secretary to discuss the move. We sought
assurance around the checks and balances in place, givensuch a role change is not considered to be best practice.
Most notably the board had appointed a new Senior
Independent Director (SID) to support the move from
CEO to Chair. The new SID has experience as the Chairof a main market company and has robust experience ofgovernance. Having himself moved from an executive toChair role, he was considered very well placed to support
the transition. In addition distinct role specifications are inplace, including a charter which sets out these distinctions.
Outcome:
We were provided reassurance that the role changes
were working well. In view of this, and having considered
the benefit of retaining the former CEO’s expertise andrelationships, we were comfortable with the move in thisinstance. We voted in favour of his re-election at the AGM,
and his appointment was approved with 92% of votes. We
have indicated that we would like to speak to the SID in due
course to discuss how the board is functioning following
the changes to composition.

Prior to voting at the 2023 AGM, we engaged with thecompany to discuss remuneration outcomes, the decision
making process and to query whether the Remuneration
Committee was considering using any discretion to adjust
awards. We were advised that no part of the bonus or
vested LTI would be adjusted or waived.
Outcome:
While the company provided further commentary on
remuneration outcomes, we were of the view that avote against the Remuneration Report was warranted. In
advance of the AGM we disclosed our voting intentions
and rationale to the company, and we also disclosed thisinformation publicly. At the AGM, the Remuneration Report
was approved with 93%. We will monitor outcomes for
FY23 and engage in respect of any concerns.

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2023 Voting
Case Studies
Seven and i

Dow

Region: Asia

Region: USA

Vote topic: Proxy Contest

Vote topic: Shareholder Proposal (Environment) –Report on Reduced Plastics Demand

Background:
Seven & i Holdings is a Japanese retail company which
operates convenience stores, supermarkets anddepartment stores primarily in Japan and North America.
We have been engaging with the company for several
years. At the company’s AGM in May 2023, the board
proposed thirteen incumbent directors for re-election
and two new independent outside directors for election.
However there was a board contest as US based activist
shareholder ValueAct Capital nominated four outside
director candidates to the board.
Action:Background:
At Dow’s 2023 AGM, investors As You Sow and Mercy
Investment Services submitted an environmental proposal
to the agenda. The investors requested of the Board
that the company issue an audited report addressing
whether and how a significant reduction in virgin plastic
demand would affect the company’s financial position
and assumptions underlying its financial statements. The
proposal concerned a specific plastic demand scenario
in which there is significant plastic demand reduction
and substitution.

Prior to the general meeting, abrdn engaged with thecompany to understand board dynamics and to discuss
corporate governance as well as execution of strategy. In
our engagement we conveyed our view that improvement
in board independence is needed, and also that we
wanted to see improvement in capital allocation, strategy
execution and shareholder communication. We also
engaged with ValueAct to discuss their proposals and tounderstand their views and interaction with the company.

Action:Outcome:

Outcome:

Following our engagement with both parties we instructed
votes against the company president, two long standing
directors and the two new board candidates to emphasise
our views. Having considered the proposed candidatesof ValueAct we were of the view that the nominees would
bring relevant board, capital allocation and executive
experience to the company. We therefore voted infavour of the four candidates proposed by ValueAct.
While these nominees received around one third support
from shareholders, this did not meet the threshold forappointment to the board. All the board proposed
candidates were elected/re-elected. We will continue toengage with the company on our views.

Stewardship Report 2023

We undertook analysis of the proposal and company
practice. Regulatory drivers and consumer expectations
are shifting demand away from virgin plastic towards
recycled alternatives. Considering regulatory drivers
and consumer expectations, we were of the view that
undertaking the suggested analysis would be a useful
exercise to understand the potential financial impact ofsuch a scenario.
Dow has previously highlighted the demand and supply
imbalance associated with forecasted recycled plastic
production capacities, as such we also see this scenario
analysis exercise as a way to better understand the scaleof the opportunity Dow seeks to capture. We therefore
voted in favour of the shareholder resolution, which
received 30% support. Though the resolution was notpassed, we engaged with the company after the annual
meeting in 2023 to discuss its approach to recycled plastic
and explore the company’s view of the market dynamics
in greater detail. We intend to continue our engagementwith the company in 2024 to monitor the progress of its
recycled plastic strategy and review other material ESG
risks and opportunities.

592023 Voting
Case Studies
TJX

Ubisoft

Region: USA

Region: Europe

Vote topic: Shareholder Proposal (Social) –Adopting Paid Sick Leave Policy for Employees

Vote topic: Related Party Transaction

Background:At the company’s 2023 AGM, shareholders were asked
to approve the auditors’ special report on related party
transactions. While this is a standard resolution and had
not historically been an area of voting dissent, we hadconcerns regarding a ‘master agreement’ which wasentered into between Ubisoft, Guillemot Brothers Ltd
and Tencent in 2022. Chinese technology conglomerate
Tencent acquired a 49.9% stake for €300m, in Guillemot
Brothers Ltd – a vehicle controlled by the Guillemot family
which holds the largest share position in Ubisoft. Tencent
will have only 5% of the Ltd company’s voting rights and noboard representation. The deal implied a valuation of €80
per share for Ubisoft which was significantly higher thanthe closing price the day before the announcement. The
master agreement provided an extension of the family
concert arrangement to Tencent, allowing an increasein the concert shareholding to 29.9% of Ubisoft’s sharecapital. Tencent undertook not to increase its shareholding
beyond 9.99%, and not to dispose of securities forfive years.

At TJX’s 2023 AGM, shareholder Figure 8 Investment
Strategies submitted a proposal asking the company toadopt and disclose a policy that all employees, part-timeand full-time, accrue some amount of paid sick leave thatcan be used after working a reasonable probationary
period.
Action:
We undertook analysis of the proposal and company
practice. While we were supportive of the range ofbenefits awarded to employees and the steps TJX took
to support employees during the Covid pandemic, we donot believe the existing range of benefits fully address theneeds of part-time employees. We recognise that thecompany is aligned with legal requirements, and that we
did not support a similar vote in the previous year, however
we now sought to encourage the company to go beyond
these requirements.
Outcome:
We were of the view that providing paid sick leave topart time employees would support retention andreduce occupational injury and contagion. As a result,
we supported the shareholder’s proposal. The resolution
received 22% support, so did not pass. We subsequently
engaged with the Company to reiterate our position andhear its views.

Background:We had significant concerns regarding the agreement
particularly in view of the reduction in economic interest of
the Guillemot brothers, while they continue to hold 5 out of
14 board seats.
Action:Prior to the AGM, we engaged with the company todiscuss the agreement and broader governancetopics including board composition. Primarily due tothe presence of executives, the board is not majority
independent and we indicated that we would like to see
this addressed.
Outcome:
While two new NEDs proposed at the AGM appeared to
be good appointments, and we supported their elections,
we do not consider this to go far enough to address
broader concerns regarding corporate governance.
To further emphasise our concerns regarding theagreement we voted against the two incumbent NEDs
who were proposed for re-election and also against thecompensation of the Chair/CEO and four Vice-CEOs.
At the AGM the vote on the related party transaction
received significant dissent of 43%.

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Policies andProcesses
This section highlights how we operate as a responsible
business, detailing our stakeholders, how we manage risks,
including macro-thematic risk, and how we engage with
our suppliers.

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61

Our stakeholders
Employees
Embedding our commitments
Actions we are taking in support of colleague engagement
During 2023 abrdn have focused on integrating ourcommitments into every stage of colleague experience,
supported by powerful storytelling and robust feedback
mechanisms. The examples below illustrate some of ourengagement programmes in action.
1

Leadership communication programme
In 2023 we launched our leadership communication
programme. The focus being to strengthen trust,confidence, and connection between leadersand colleagues. We have six active leadershipcommunication channels, including digital broadcasts,
informal coffee sessions, and hybrid townhalls.
We continually gather feedback and make changes in
response to colleague ideas.

2

Our listening strategy
Central to our approach is our strategy for colleague
listening. Our regular rhythm of surveys includes
candidate onboarding, leavers, and complete
engagement monitoring. These provide actionable
analytics that empower people leaders at all levels of
the business, in addition to enabling focus on the areas
with the most significant impact.

3

Talking talent series
We want colleagues to feel abrdn is the place to growtheir careers. Building on our 2022 series we invitedleaders and colleagues to come together to sharepersonal development stories. This amplifies ourexisting development programmes and illustrates
opportunities available at all levels.

42023 engagement results
Each year our annual engagement survey provides
colleagues with the opportunity to have their voices
heard. Our November 2023 survey saw 79% of ourpeople take part, with over 5,200 comments providing
a rich picture of how we are doing across areas offocus. Amidst a challenging market, ongoingtransformation, and organisational change, overallcolleague engagement increased slightly to 54%(2022: 50%). We see positive scores attributed to theroles people play, their sense of inclusion, the natureof their work, and motivation levels. Where we havefocused, we see improvements across 2023, withincreased scores around leadership, systems, andprocesses. As we transform abrdn, we continue tofocus on our culture and the actions we need to taketo shape our overall colleague experience. Whilst weknow there is work to do, we are ambitious andcommitted to making demonstrable progress forour people.
Looking ahead
Clarity, communication, trust and transparency
are key drivers of progress. Continuing to listen,and demonstrate that people are important tothe success of our business, is the top action thatwill build confidence in leaders and the future.

Awards and recognition
In 2022 only 44% of colleagues felt recognised fortheir work in the business. We want colleagues tofeel celebrated for the work they do, so we launched
our first ‘abrdn awards’. With over 600 colleagues
receiving a nomination it was a great response. In 2023
we see an improvement to 64% of colleagues feelingrecognised for their work.

5

Colleague communication channels
We continue to evolve our approach to colleague
communications, delivering strategic content throughstreamlined channels. Each week the most important
updates from the business are collated and circulated
through our all-colleague email. This includes
amplified personal stories and community activities.
In 2023 we also rolled out Microsoft Engage, which wehope will lead to greater interactivity in 2024.

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62

Our stakeholders

Speaking up
Importance of speaking up
We are committed to operating in an honest and transparent
way across abrdn, and this extends to speaking up should
there be an issue relating to any aspect of our conduct. We
have a duty to raise any concerns related to our regulatory
responsibilities and conduct. This principle helps to protect
our clients, customers, colleagues, and our business, as we
act with integrity and take accountability for our actions.
Reporting channels
If colleagues have a concern, we encourage them to report
this to their manager. This is our suggested first point ofcontact, and is often the best way to resolve any challenges.
Our latest annual engagement survey finds that 61% of
respondents agree their leaders role model open andhonest two-way communication, which is an increase of
19 percentage points versus the previous survey. This isimportant as our objective is to create a safe environment
where all colleagues feel empowered to express concerns.
We also have formal grievance procedures in place should
there be a need to follow a different process. All concerns
raised are taken seriously and any victimisation, harassment,
discrimination or bullying of anyone is not tolerated and may
be considered a disciplinary matter.
Confidential Speak Up service
Recognising the importance of multiple reporting
channels and the ability to raise concerns
anonymously, an independent Speak Up service isavailable globally to clients, colleagues, third parties
and anyone who may wish to raise a concern. The
service is managed independently by Safecall andis available 24 hours a day, seven days a week, in
multiple languages, with a dedicated website
www.safecall.co.uk/report. All reports are monitored,
and we carry out investigations based on the natureof report. Any concern raised is taken seriously andinvestigated. The anonymous nature of the service
is important, but it can limit our ability to provide
feedback to any concerned parties. Our Audit
Committee maintains oversight over the Speak
Up arrangement, with a specific report on related
matters provided annually.

82022: 11

Speak Up reports
In 2023 we received 8 reports via the service,versus 11 reports in 2022.

Stewardship Report 2023

63

People as our
key asset
Case study
Diversity Equity and Inclusion governanceand progress
Our DEI strategy helps hardwire Diversity, Equity, andInclusion through all we do. Our strategy intends to makea positive impact across our business and is led by our
Executive Leadership Team, with oversight from our
Board. It enables us to measure progress, hold ourselves
accountable and reflect the expectations we have ofinvestee companies.
Our Nomination and Governance Committee has
oversight for our DEI strategy across abrdn. This oversightis additionally supported by our Board and otherCommittees. Our DEI actions across abrdn are led by our
Executive Leadership Team, with accountabilities tracked
through scorecards and goals. Our strategy is global but
requires local delivery to create authentic inclusion. Eachof our Executive Leadership Team sets priorities relevant
to local contexts against our framework. This is supported
through a committee of leaders from across the businessto help set our DEI strategy and support the delivery of
local initiatives. Our global code of conduct sets out thestandards and principles that we hold ourselves to, witheach of our colleagues asked to consider the principles inevery decision we make.
In 2023 we updated our Gender, Ethnicity, and socioeconomic inclusion action plans through our Global
Inclusion committee, our colleague led networks, andour HR specialist teams continue to drive work towards adiverse, equitable, and inclusive global organisation.
We have committed to a new ethnicity target applicableto our senior leadership population which comes into
effect from 2024 while continuing to meet the Parker
review recommendation of one abrdn plc Board member
who identifies as ethnic minority.

Stewardship Report 2023

Our commitments, oversight, and colleague experience
priorities globally, enable us to hardwire DEI through all that
we do. With a toolkit of inclusive initiatives, partnerships,
and action plans we focus on encouraging leaders torole model, use, and encourage all colleagues to embed
the tools we have in place to support diverse, equitable,
and inclusive teams. This includes inclusive recruitment
drivers such as Diversity Partnerships, Diverse interviewers,
informative data, training for hiring managers, interview
templates, and an augmented writing tool to ensure role
profiles are attractive to a wide range of candidates.
With tools available from our Talent Acquisition team,
Learning and development, reporting and data, and otherareas; our various inclusion groups lead awareness of thiscapability, and encourage colleague empowerment to
use these tools to create inclusion each and every day.

Incentivising
The consideration of client outcomes and the integrationof broader ESG risks into each individual’s performancemeasures are a key part of our incentive framework. By
linking the corporate purpose through functional andindividual objectives, we aim to ensure alignment andconsistency with our strategic direction and expectedbehaviours. Our global remuneration policy is updated
annually. On page 115 of our 2023 Annual report andaccounts, we include details of our Directors’ remuneration
report, where we outline the performance conditions
for the annual bonus in 2023, which aims to reward thedelivery of our company’s business plan. Non- financial
performance conditions carry a 35% weighting, which
includes a 15% weighting against ESG objectives. These
incorporate objectives against environmental (viasustainability and decarbonisation metrics) and social
factors (via employee engagement and diversity metrics).

64People as our
key asset
Executive remuneration
Our Executive Directors Remuneration policy is set by
our Remuneration Committee and agreed at our Annual
General Meeting. The award for variable bonus considers
non-financial measures, including performance against
our climate change targets, alongside progress on climate
focused solutions and client engagement. Climate-related
performance makes up 5% of the overall scorecard. The
Remuneration Committee received periodic updates fromthe business and independently review performance. The
policy is applicable to both our Chief Executive Officer andChief Financial Officer. More information is available in our
Annual report and accounts.

Staff remuneration
Our investment teams are responsible for incorporating
sustainability considerations into their investment process,their remuneration structure contains both qualitativeand quantitative sustainability-related KPIs. Qualitative
KPIs tend to focus on the quality of engagements andthe engagement outcomes. Quantitative KPIs acrossinvestment desks will have a minimum number of ESG
training sessions that need to be completed and otherasset class specific targets. For example, the Active
Equities team has ESG objectives that are aligned with
our investment objectives, our company strategic drivers
and behaviours, and our more focused investment
behaviours. These objectives are used to create the goals
for individuals against which their performance andincentivisation is assessed. This has been incorporated
into the scorecard of these individuals’ investment roles.
The result is that ESG becomes a third component of‘Investment Excellence’ alongside ‘Research’ and ‘Portfolio
Construction’ and will constitute between 12% and
40% of the overall scorecard, or higher, depending onrole. Managers will assign a qualitative score to the ESG
component of the scorecard, informed by various inputs
including peer and stakeholder feedback. What mostappropriately drives the score will be dependent on
individual roles and responsibilities. Other asset classes willtake similar, but nuanced, approaches which align with ouroverall approach to how we incentivise the incorporationof ESG considerations.

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65

Our stakeholders

Clients
We continuously seek opportunities to fully understand ourclients’ investment and stewardship needs so that we cantailor investment solutions and wider outcomes that meetor exceed their expectations. We have a broad range ofclients who invest with us from large strategic partners,
through corporate and public institutions, insurancecompanies, charities, wealth managers, private banks,
to financial advisers and high net worth individuals. The
services and products used by these clients can vary fromcreation of bespoke products, to management of theirassets in bespoke segregated mandates or investment in
our wide range of pooled investment vehicles globally.
Our approach with clients is very much one of partnershipand we engage with them to understand their views
and position with regards to stewardship throughout thefull client investment lifecycle. Early in the relationship,for example during the Request For Proposal or pitch
stage, our dedicated client teams will discuss a client’s
requirements with them to understand how thesealign with our stewardship approach. Through thisprocess we aim to ensure that we are able to deliver onthese expectations.
Once we have on-boarded a client, the relationship ismanaged by our client-facing teams around the world.
In assessing the services we provide our key metric is
direct feedback, from either clients themselves or via theirconsultants or advisers. We access this through regularclient meetings, during which we seek feedback as to how
we are performing versus their expectations and needs.
We also believe in building relationships through sharing
our knowledge and expertise with our clients by organisingseminars, webinars and roundtables for them so that
we can share our thinking and listen to their views on
important themes and likely future developments.
Additionally, through use of industry surveys and providers,such as the Wisdom Council, we gather input from clientsso that the products and solutions that we offer are bestaligned to meet client expectations. During the course of2023 and beyond, we will continue to build on our client
engagement framework and use of our surveys and client
service reviews, to gather feedback to help shape ourstewardship approach and initiatives.

Stewardship Report 2023

We hosted and attended numerous client round-tables
and events, and provided client training and education
on stewardship and sustainability matters upon request.
We also expanded our sustainability solutions, launchinga range of sustainable index strategies to cater for clientsseeking to integrate ESG factors in an efficient manner andlaunched one of the largest native woodland and peatland
restoration projects, in Scotland’s Cairngorms National
Park, to support our clients’ environmental objectives.
Furthermore, we collaborated with numerous clients in thedesign and conversion of their segregated mandates tobecome more ESG focused and implemented enhanced
screening (e.g. of controversial issues).
Other noteworthy mentions include: supporting thedevelopment of a strategic client’s Net Zero transition
strategy and enhancing our associated reporting toinclude enhanced forward-looking climate metrics;
partnering with one of our strategic clients to test the TaskForce for Nature-related Financial Disclosures’ (TNFD)
Beta reporting framework, ahead of the full version’splanned release in Q3 2023; collaborating with numerous
clients in the design and conversion of more ESG focusedsegregated mandates, screening out controversial issues
and ESG laggards, and positively screening for ESG and
Net Zero transition leaders.
Expectations from clients on how we report on ourstewardship activities remain high and was a key themein the client feedback we received during the period.
For details of our associated client reporting please refer tothe Transparency and reporting section (page 80).
In 2023, a significant proportion of our time and effort
was spent supporting our clients’ increasing stewardshiprequirements and expectations.

abrdn gather: shaping the future together
In June 2023, we hosted our Investment Forum in London,
100+ of our clients coming together to hear from our abrdn
and industry experts on the investments trends and topics
shaping 2023 and beyond. External speakers included
Anne Applebaum, Pulitzer Prize winning journalist who
covered all aspects of geopolitics and what might shape
our future. Dr Paul Redmond a leading expert on the worldof work also gave brilliant insight into different generationsin the workforce and a peek into the evolving world of AI.

66

Our stakeholders

Sustainability Summit
In May 2023, we delivered our second Sustainability Summit in Singapore, welcoming over 70 clients to join several
sessions with expert leaders covering multiple aspects of sustainable investing, the topics including:

Climatecredibility
gap

Biodiversity

Investingin thetransition

ESG
Fund
ratings

We were honoured to have David Atkin, CEO of Principles for Responsible Investment (PRI), as one of our
keynote speakers.

Stewardship Report 2023

67

Our stakeholders

Shareholders
Engaging with investors
abrdn Group’s Investor Relations and Secretariat teams
support the direct investor engagement activities of
the Chairman, Senior Independent Director (SID), CEO,CFO and, as relevant, Board Committee chairs. During2023, we carried out a comprehensive programme of
meetings with domestic and international investors, viaa range of 1:1, group, conference and reporting related
engagements. Investors had broad interests including
progress on cost reduction targets, synergies between thethree business units, progress on strategy to drive revenue
growth, investment performance, financial performanceand share price, capital allocation and strategy for returns
to shareholders, the relationship with Phoenix and therole of the share stake, customer cash balances and theregulatory focus on this area given high interest rates, andcorporate governance, including approach to ESG andsustainability. The Chairman, SID, CEO and CFO bringrelevant feedback from this engagement to the attentionof the Board.
The Board ensures its outreach activities encompass theinterests of the Company’s circa one million individual
shareholders. Given the nature of this large retailshareholder base, it is impractical to communicate withall shareholders using the same direct engagement
model followed for institutional investors. Shareholders
are encouraged to receive their communications
electronically and around 400,000 shareholders receive
all communications this way. The Company actively
promotes self service via the share portal, and morethan 203,000 shareholders have signed up to this service.
Shareholders have the option to hold their shares in theabrdn Share Account where shares are held electronicallyand around 91% of individual shareholders hold theirshares in this way.

Stewardship Report 2023

To give all shareholders easy access to the Company’s
announcements, all information reported via the London
Stock Exchange’s regulatory news service is publishedon the Company’s website. The CEO and CFO continue
to host formal presentations to support both the full year
and half year financial results with the related transcript
and webcast available from the Investors’ section of theCompany’s website. For 2024, the Company published a
Q4 2023 update in mid-January and intends to publish Q1
and Q2 2024 updates after the close of these periods.
The 2023 Annual General Meeting (AGM) was held in
Edinburgh on 10 May 2023. The meeting was arranged asa ‘hybrid’ meeting. This allowed shareholders to participate
in the meeting remotely, as well as in person. For thoseparticipating remotely, questions could be submitted
during the meeting via a ‘chat box’, many of which werethen posed to the Chair by a moderator. The Chair and
CEO presentations addressed the main themes of thequestions which had been submitted at the meeting. 45%of the shares in issue were voted. Although all resolutions
were passed, a number of resolutions received less than
80% of votes cast in favour of the resolution. The resultsof the vote were primarily driven by a small number ofshareholders, and the significant majority of shareholders
who voted did so in favour of the resolutions. Following theAGM, the Company Chair and Jonathan Asquith, abrdn’s
Senior Independent Director, met with shareholders
representing more than 80% of the shares voted against
the five resolutions, to understand their views.
Learn more from page 87 of our Annual Reportand accounts.

68Our stakeholders

Regulators and policymakers

Affiliations: How we engage with the market

The level and scope of regulation in relation to ESG
continues to evolve. Although some of this regulation may
be subject to change as it evolves, overall it supports a levelplaying field for the investment industry.

We bring our subject matter experts together withinvarious working groups and forums to identify issues anddrive change in the areas of climate change, human rights,
modern slavery, and diversity, equity, and inclusion. This
structure connects our corporate and investment experts
and infrastructure to ensure alignment and oversight of
the handling of these key issues.

Actively monitoring regulatory change, including
prospective change, that affects the business, services,and operations of our regulated entities, is crucial. We
closely monitor regulatory developments in the UK, theEU, Asia and all jurisdictions where we operate. Horizon
scanning is primarily done through an automatedtool which allows effective recording, monitoring andmanagement of regulatory change.
We use our membership of national and international
industry associations to actively and constructively
engage with the wider industry on upcoming
regulatory change. Through these trade bodies wefeed into consultation responses, issued by regulatory
authorities, and where the opportunity arises we engage
constructively with regulators. Wherever possible,
we contribute to the development of industry codes,
guidelines, good practices or similar voluntary standards.
We also participate directly in public consultations
and have delivered stand-alone responses to many
consultations and calls for evidence. Through our Public
Affairs team, we actively seek opportunities to engage
with our regulators on policy matters to better understandtheir perspectives and offer our own assessment oflikely impacts.
The issues we monitor and engage on are wide ranging
and include ESG and sustainability, investor protection,
shareholder rights and engagement, operational
resilience, IT and cyber security, fund regulation,
trading of financial instruments, access to markets, andprudential regulation.

Stewardship Report 2023

We also work with a large number of external partners
providing us with additional stewardship and ESG insightand expertise. For example:. Investment Association (IA): We are members of the IA
a UK representative body for asset owners and asset
managers. We have representation on the following
committees: Stewardship Committee, Remuneration &Share Schemes Committee, Sustainability & Responsible
Investment Committee.
. Principles for Responsible Investment (PRI): We aresignatories to PRI, which is an UN-supported network ofinvestors that works to promote sustainable investment
through the incorporation of environmental, social andgovernance factors.

. Climate Action 100+ (CA100+): As discussed on page 34,
we are part of CA100+, which is a collaborative initiative
between asset owners and managers to engage withhigh-carbon emitters.
. Nature Action 100 (NA100): We are involved in Nature

Action 100, a global investor engagement initiative todrive greater corporate ambition and action to stem
nature and biodiversity loss. See page 34 for more detail.

. Net Zero Asset Managers (NZAM) initiative: We area member of the NZAM initiative that sees asset
managers work in collaboration with clients to achieve
net zero by 2050 or sooner.

69

Our stakeholders

2%
12%
4%

Communities£2.1m
Total charitable
contribution7, 8(2022: £2.4m)

82%

Contribution
One of the most tangible ways we support our communities
and provide our people with the opportunity to make awider difference is through our charitable giving strategy
and related partnerships. We are committed to supporting
our powerful partnerships strategy through significant
contributions and continue to enhance the support ourcolleagues provide independently.

UK

EMEA

Donations

Americas£1.4m

Strategic
partners£211k

Colleague
forums£180k

Thematic
givingAPAC

Donations direct to powerful partnerships (2022: £1.7m).

GovernanceOur giving strategy is governed through the abrdn
Charitable Foundation (aCF) SC042597, with our Board of
Directors meeting quarterly to consider new partnerships
and discuss strategy and progress. The Board of Directors
for the aCF has six members, including two independent
Directors and provides oversight and guidance for ourcharitable giving activity globally. Though it is important tonote that some community support or sponsorship activity
is governed directly by abrdn plc. ii also retains discretionover specific community partnerships. The aCF Board also
provide some autonomy to regional colleague forums,
with the objective to enable colleagues to engage directlywith chosen partners and projects.
Charitable contribution
In 2023, abrdn directly supported charities throughthree streams of funding aligned to our giving
strategy. Our powerful partnerships are intended to
be transformative, enabling partner charities to deliver
meaningful projects beyond their existing capabilities, withadditional localised giving through our colleague forums,
and donations in support of specific thematic causes.
We note our total contribution in 2023 remained relatively
consistent with the previous year, with plans in place for2024 to consider new powerful partnerships.

Donations direct to charities selected by our regional
colleagues (2022: £96k).

Donations in support of specific causes linked to global
events, or select localised grants (2022: £377k).

Fundraising£53k

Matchedcontribution

abrdn matching of colleague fundraising through ourFundraise Plus scheme (2022: £34k). Colleagues fundraisedand donated £194k voluntarily.

Payroll giving£103k

Matchedcontribution

abrdn matching of colleague giving through our Give As
You Earn scheme (2022: £105k). Colleagues donated £190k
voluntarily via payroll giving.

Enhancing colleague giving
Many of our colleagues are passionate supporters ofspecific causes, or organisations, and we enable thisthrough company matching initiatives. abrdn supports
regular contributions via payroll giving, or enhance onetime fundraising with our matching initiative. We also wantto encourage our colleagues to use their time to volunteer
in their communities.

In-kind giving£134k

Volunteeringtime

The value of colleague volunteering time based on numberof hours volunteered divisible by average UK hourly rate(2022: £112k).

7

Figures as of 31 December 2023 relating to donations to charitableorganisations and in-kind giving from volunteering time.

8

The chart on this page does not capture the regional split matched
contributions and volunteering time but is inclusive of other noted figures.

Source: abrdn, Sustainability and TCFD report 2023.

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70

Our stakeholders

Suppliers
We expect our suppliers to adhere to high standards in theway that they operate including alignment with our Global
Third Party Code of Conduct. This includes complying
with all applicable laws and regulations, protecting labourand human rights, providing a safe work environment,
and minimising environmental impact.
We assess specific risks, including those relating to
ESG factors, at the start of engaging with our thirdparty suppliers, based on materiality of the Third Partyand Service type. We identify and address any risks orconcerns raised through our robust onboarding approach
which includes; due diligence, financial health checks,
assurance, and contract negotiation processes. These
activities continue throughout the life of the contract.
The outcomes of the due diligence process are reviewed
by relevant subject matter experts, and any issues found
are raised with the supplier through supplier relationshipmanagers and service owners. It is abrdn’s approach
to work with suppliers to address any material findings;
however, in the unlikely instance where the supplier does
not take appropriate action to mitigate risks, abrdn may
chose not to onboard the supplier or take steps to exit theagreement - such events include regulatory breach orfine, non-alignment to our third party code of conduct andcontinual service failings. Details of how we manage issues
relating to modern slavery are provided in our Modern
Slavery Statement.
Third parties providing certain services are expectedto adhere to specific ESG requirements. For example,
we ensure all staff working on our UK premises are paid
at least the higher wage level set by the Living Wage
Foundation, and we have a policy on UK Living Hours.
This mainly applies to staff working within the Facilities
area but is also applicable to contractors. In addition,
we understand the importance of treating our Third
Parties fairly which includes our commitment to paying
them on time.

Procurement, Outsourcing
and Third Party Management
abrdn’s Procurement, Outsourcing and Third Party
Management policy sets the standards for onboarding
and managing third party relationships and inherent risk.
Our Global Procurement function has a dedicated Third
Party Risk Management team who oversees the policy
and associated processes, and who can call on specialist
support from subject matter experts e.g. risk domain
owners (such as information security) if required.
The policy covers:
1. Identification and Segmentation
2. Due Diligence
3. Engagement (contracts)
4. Ongoing Monitoring; and5. Renewals and exits.
The identification and segmentation stage is where abrdn
select the third party service provider. Selection is doneon the basis of best value to abrdn, with appropriate
due diligence, governance, contractual protection andoversight in place to minimise the risk the third party may
pose. A dedicated Procurement team within abrdn workwith the business and with abrdn legal to ensure that therequired activities, including sourcing, are carried out andthat appropriate governance is in place. These activities
ensure that relevant SLAs, contractual provisions anddue diligence (which covers core domain areas as wellas financial health and financial crime screening) arein place prior to onboarding. Ongoing monitoring takes
place through regular performance meetings (dependent
on the profile of third party) and regular ongoing due
diligence. To support the above, abrdn’s Third Party Codeof Conduct is published on its website as well as beingreferenced in its standard contracts and purchase orders.

We have a number of key suppliers who provide dataand services closely related to our stewardship services.
These include Institutional Shareholder Services (ISS),
MSCI, LSEG and Trucost. As each service is onboarded,
the processes, as set out, are followed to ensure theseThird Parties’ policies and practices align to our standards.

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71

Corporate risk management

Our approach to risk management

Sustainability risks

A strong risk and compliance culture underpins ourcommitment to put client and customers first andsafeguard the interests of our shareholders. Our Board has
ultimate responsibility for risk management and oversees
the effectiveness of our Enterprise Risk Management(ERM) framework.

We have a responsibility to shareholders, clients,
customers and all stakeholders to assess, report on,
manage and mitigate our sustainability risks. As aninvestment firm, we need to consider the impact of ourcorporate activities while making investments in linewith client mandates. We are mindful of the increasing
challenges around providing consistent ESG disclosuresacross multiple geographies. During 2023, we continued
to deliver against a number of key milestones. These
included regulatory disclosure requirements under the
EU SFDR and UK TCFD and enhancing our climate andcarbon analytical tools. We completed the integration of
ESG data into our investment data platform to support
2024 regulatory reporting and transitioned to a new ESG
screening and exclusion tool. We have commenced areview of the UK SDR reporting and disclosure requirementfor delivery in 2024.

ERM framework
The ERM framework supports risk management
throughout our business. We operate ‘three lines ofdefence’ with defined roles and responsibilities. We
continually evolve our framework to meet the changing
needs of the company and to make sure it keeps pacewith industry best practice. In 2023, improvements to theframework included:. Delivering a new approach to Risk and Control Self
Assessments, focused on key business outcomes andexecutive accountability.
. Improving abrdn’s risk acceptance process. – Improved
management information to better measure how theframework is applied in practice.

. Reviewing our risk taxonomy.
. Strengthening capabilities within Enterprise Risk.
. Further embedding of capabilities to support
Operational Resilience and Consumer Duty outcomes.
. Updating our Global Code of Conduct.

Stewardship Report 2023

First Line Governance
Our Investment Vector Risk and Control Forum (IVRaC)
supports the Investment Vector Executive (IVE), Senior
Managers and our regulated Legal Entities in fulfilling theirfunctional and regulatory responsibilities in regard to the
key risks and controls associated within the operating
and control environment of the Investments business.
Sustainability risks are listed on our IVRaC risk register,with the high-level, specific risks and relevant actions
tracked to ensure ongoing governance and management.
In addition, the IVRaC is the point of escalation for any
individual events or issues which cannot be resolved
through the operation of the standard governanceprocesses and procedures. Our Chief Sustainability Officer
is a member of IVRaC

72

Identifying market wideand systemic risks
Our investment process
Our investment process begins with rigorous researchof macro systemic impacts and material ESG risks andopportunities, alongside other financial metrics applying toindividual investments.
We believe that deep fundamental research, a disciplined
investment process and full analysis of ESG issues is a key
facet to deliver long-term returns.

Macro research
Our Global Macro Research team, supported by ourInvestments Sustainability Group expertise produces
original research for use by our investment teams.
It analyses the intersection of economics, government
policy and markets, producing an assessment of thelikelihood and impact of macro and systemic risks suchas climate change and geopolitical issues.

Our macro research, and particularly theconsideration of ESG factors within it, has fourinter-connected meta-themes.
Together they embody our ethos, ‘The power ofinvestment’, forming a key input to our strategic asset
allocation views and decision making. This helps us andour clients to allocate capital to assets which are alignedwith the major trends that impact our investing over the
longer term.
The output of our macro research is also used to develop
a set of key themes that drive aspects of our engagement
plan. The Investments Sustainability Group, working
with relevant asset class teams, translates the output
from our macro research process to identify these
thematic engagements.

Long-term meta-thematic investment opportunities

Investing inpeopleInvesting inpolicyInvestingin planet

Investing inprogress

You can find original abrdn Global Macro Research publications on our website

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73

Macro risks

The material macro risks that our Global Macro Research team has identified are detailed below. Each of these arealigned with our four meta-themes and we have provided the impact assessment and mitigation for our clients
through our investment activities.
Meta-theme

Macro risk

ImpactMitigation

PeopleConflict within nations
a. Inequality
b. Populism
c. Extremism

Distributional conflicts have the potential
to influence markets through the way thatgovernments respond to them. For example,
perceptions that income inequality is too highcan lead to policy changes that seek to regulate
or tax businesses more heavily, reducing theirability to generate the after- tax earnings
growth our analysts otherwise expect.

The ‘populism persists’ theme is monitored toprovide timely analysis for portfolio managers.
This allows us to incorporate the risks associatedwith policy and regulatory changes derived from
distributional conflicts into our research agenda
and investment decision-making.

PeopleDiversity, equity, and inclusiona. Discrimination
b. Social inequality

Diversity, equity, and inclusion are core to theway that companies manage their humanresources. It is also an increasingly importantcomponent of firms’ social licence to operate.
It therefore needs to be seen as a risk factor aswell as a source of investment opportunity

Our ESG research process includes a strongemphasis on diversity, equity, and inclusion.
We have a DEI approach for investment built
around research, investment integration, active
ownership and solutions.

PolicyRisk of policy error
1. Recession risks
2. Risks to inflation progress

US growth has been robust, while inflation has
moderated. This provides the pathway to a softlanding, however there are several challenges.

Asset class teams focus on investing in higher
quality firms with strong balance sheets that areless exposed to refinancing risks.

Credit conditions remain tight, while thesupportive fiscal backdrop in 2023 will shift to asmall drag as spending cuts bit.

Macro teams to build diversified portfolios thatcan perform in different policy regimes.

Inflation has moderated well, however, a numberof major economies face uncomfortably highrates of wage growth and core inflation.

The Global Macro research team to monitor
and forecast policy developments to capture
regional policy divergenceCentral banks pushing the elevated rates policy
maybe surprised at how low inflation can fall
PolicyGeopolitical
1. Middle East Conflict
2. US-China tensions
3. Russia-Ukraine conflict
4. Eurozone fragmentation
5. Global election uncertainty

Large geopolitical shocks can disrupt markets
through their effect on energy prices, economic
growth, corporate earnings and the pricing ofrisk premia.
Middle east tensions may threaten local stability
and also impact global trade, supply chains,freight transportation and energy prices. Growthand inflation progress maybe impacted.

Global Macro Research provide regular updates
on evolving geopolitical risks to ensure portfolio
managers are appropriately informed.
Analysis includes economic and ESG
considerations.

A serious increase in perceived Eurozone
fragmentation risks would damage theoutlook for European risk assets in particular.
An intensification of US-China tensions would
damage the outlook for global economic
growth and earnings.
PlanetClimate changea. Longer horizon manifests
in shorter-term issues
and opportunities
b. Just transition

Climate transition and physical risks have thepotential to significantly alter the return profile
of exposed assets over the coming decades.
Transition risks related to policy changes havethe potential to move markets and strand assets
on short-term time frames. While the magnitudeof physical climate risks is expected to intensify
over the coming decades, extreme events are
already impacting an increasing number ofareas.
A climate transition that does not take into
account social factors (avoiding unjust harm or
exacerbating inequalities) would exacerbate
financial risk from social issues.

Stewardship Report 2023

The increased significance of climate changerisks has led us to create a framework to deal
with them. This is described in detail in our2023 Sustainability and TCFD report and our
publication ‘Climate Change: Our Approach for
Investments’. We undertake extensive climate
scenario analyses each year to make sure we
fully understand the potential financial risks
and opportunities associated with different
plausible climate scenarios. This research is
being incorporated into investment decisionmaking across the company. We publishedin December 2023 a framework to invest in ajust transition, and actively engage on material
just transition issues in key sectors. We plan toexpand our approach to consider how emerging
just transition data and frameworks can beembedded into the investment process and thedevelopment of aligned products.

74

Macro risks

Meta-theme

Macro risk

ImpactMitigation

PlanetNaturea. Land, sea and freshwateruse changeb. Resource exploitationc. Pollution
d. Alien Invasive Species
and OtherMore than half of global GDP is moderately
or highly dependent on nature. Unsustainableeconomic activity is driving destruction of natureand species loss because the economic andsocial value of biodiversity is not being properly
accounted for. This has significant economic
impacts as businesses all have a direct orindirect impact on nature that could affecttheir operations.

We published in November 2022 an approach
document on how we incorporate natural
capital considerations into our investment
processes. We have a dedicated Senior Analyst
that undertakes research on Nature trends
and developments. Nature is incorporated into
corporate engagement. abrdn participatesin the multiple initiatives and associations toencourage improvements and best practices.

Progress

Corporate social licenceto operatea. Changing views of society
and impact on companies
b. Inaccurate assessmentof reputational risk bycompanies

As the idea of the corporate social licence tooperate takes hold, the profile of what makes
for a successful company likely to be rewarded
by the investment community is also changing.
If we do not take these changing social andinvestor expectations into account, we may
own the wrong mix of assets and generate
insufficient returns for our clients.

We have a comprehensive ESG research
process designed to capture how risks are
evolving. This includes our ESG House Score(as detailed on page 41) and a robust ESG
research governance process that ensures ouragenda is focused on the most investmentrelevant manifestations of these changes- whether in terms of human rights, labour
standards or the environment.

Progress

Cyber crime and data privacy
a. Cyber attacks
b. Data fraud and theft

As the digital economy becomes increasingly
dominant, so does the vulnerability of aggregate
economic growth and individual firms to cyberattacks. This was illustrated with the ‘Solar Winds’
hack on US government agencies, as well as
in companies like Microsoft that are critical
digital service providers. It is also an increasing
driver of conflict between nations and therefore
geopolitical risk.

Cyber security is incorporated into our
meta-theme framework and is an essential
component of the way we assess the risk andopportunities that arise from the individual firms
we invest in. This theme is also being drawn on
in macro investing funds as it becomes a more
important driver of more aggregated returns.

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75

Conflicts of interest

Effective management of conflicts of interest is at thecore of good client outcomes, and a key aspect of the
global regulatory and legislative conduct risk agenda.
We provide a wide range of products and solutions toa variety of clients, and we may from time to time haveinterests that conflict with these clients. There may also
be conflicts that arise from the personal activities of ouremployees - for example, second jobs, business venturesor outside appointments.
We ensure that all appropriate steps are taken to identify
and prevent any conflicts of interest. However, if a conflict
cannot be prevented then we take appropriate steps tomitigate and manage it.
We have policies and procedures to address conflicts ofinterest that may arise from:. Personal account dealing and outside appointments
ensuring, where required, these are recorded andapproved.
. Providing or receiving gifts and hospitality – strict limits
on what is acceptable with all gifts above a definedvalue requiring approval and to be registered.

. Information exchange - putting in place adequate
procedures to prevent or control the exchange of
information between relevant persons engaged in
portfolio management activities, where the exchange
of information between these persons may negatively
impact the interests of one or more clients.
. Voting at investee company AGMs - the funds wemanage on behalf of our clients will be eligible to vote at
general meetings where there is a potential conflict ofinterest, including:. an investee company that is also a significant client.
. an investee company where an executive director
or officer of our company is also a director of thatcompany.
. an investee company where an employee is a directorof that company.
. an investee company with which we have a strategic
relationship.
. a significant distributor of our products.
. a significant supplier any other companies that may
be relevant from time to time.

Stewardship Report 2023

Where actual or potential conflicts are identified these
are reported to our Risk and Compliance team andrecorded on a central register, which is maintained within
the function and escalated appropriately. As a generalprinciple conflicts of interest are managed at a local level.
However, in instances where it is deemed necessary the
conflict is escalated to the Executive Leadership Team. Key
details recorded include the type of conflict of interest andwho the conflict relates to, the measures taken to manage
the conflict of interest and the senior individual who is
responsible for overseeing the management of the conflictof interest.
In line with the requirement to manage conflicts at a local
level, our Proxy Voting team maintains a list of companies
which are exposed to the list of conflicts noted above.
Our conflicts of interest list for 2023 comprised 1,172
companies. For companies on this list held in our active
portfolios, when a voting decision is taken, the analyst
responsible is required to record the fact that the conflictof interest has not impacted the voting decision made.
In situations where it is not possible to demonstrate an
impartial vote we will decline to make a voting decision.
Steps taken by abrdn to manage actual, potential andperceived conflicts can include, but are not limited to:. Procedures to prevent or control the exchange of
information between relevant persons engaged in
activities involving a risk of a conflict of interest where theexchange of that information may harm the interests of
one or more customer or client.
. Clear and segregated reporting lines. Processes to separate conflicting activities for clients toensure that individual employees are prevented fromperforming activities where conflicts could arise.
Any actual, potential or perceived conflict of interest
that cannot be effectively managed, and which poses amaterial risk of damage to a client’s interests, are disclosed
to the client before undertaking the business.
All our employees are required to complete our Conflictsof Interest mandatory training module every two years.
99.65% of employees completed the course in 2022, andthe course will be rolled out through 2024. This training
is designed to provide employees with an awarenessand understanding of conflicts of interest and their
responsibilities towards these. Where appropriate, further
training is provided and tailored to targeted business areas
and to specific roles.

76

Case study
Examples of conflicts of interest

There are several different scenarios that can create aconflict of interest.
1. Potential conflicts can arise between abrdn’s interests
and those of its clients where their shares are held incompanies in which abrdn has strategic shareholdings.
In such situations abrdn does not instruct a vote on theshares held on behalf of its clients. abrdn has a strategic
partnership with Phoenix Group, and a seat on theboard. In view of the conflict which exists we did not voteour clients’ shares at Phoenix Group’s 2023 AGM.
2. An employee of abrdn has been offered a position on
an external fund board. The conflict is raised on My
Compliance Office (our internal compliance system)
prior to accepting the role. Appropriate mitigants
are put in place and compliance are comfortable toapprove based on the controls identified.
3. Potential conflicts can occur when an employee holdsa regulatory or legal responsibility across entities. In
this instance, compliance will engage to ensure theappropriate identification and management is in place.
If the conflict cannot be mitigated it will be avoided.

“We ensure that ourdecisions and actions
always put the bestinterests of our clients first.”

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77

Our corporate influence

We have an important role in the development of public policy, industry standards and general practice. We want toensure that each of these develop in a manner that is aligned to the best interests of our stakeholders, including ourclients, and the delivery of the best outcomes for them.
To meet this responsibility, we focus our activities in four key areas as described in the table below.

Policy applying to
our investments10

Policy applying
to abrdn

Policy applying
to clientsIndustry
standards

Includes shareholder rights,
accounting standards,
auditing, climate policy,
labour policy, tax, fiscal
and monetary policy.

Includes corporate
activities and disclosures
such as climate change
and employee issues,
global financial services
regulation and regulation
applying to suppliers.

Includes pension funds,
insurance company
legislation and regulation.

Includes development ofbest practice across all
activities such as Principles
for Responsible Investment(PRI), climate analysis,transparent disclosure andmarket infrastructure.

Methods used include:. Published thought pieces. Board and senior
executive engagements. Direct input togovernments andregulators. Membership of tradeand industry bodies

10

Methods used include:. Input through industry
associations. Direct input on
consultations. Senior executive
engagements

Methods used include:. Input through industry
associations. Direct input on
consultations. Senior executive
engagements

Methods used include:. Published thought pieces. Board and senior
executive engagements. Direct input togovernments
and regulators. Membership of tradeand industry bodies

Investments business only.

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78

Our corporate influence

Impact of policy and standards on
our investment
We use the expertise we have across our businessto analyse and assess the impact of policy on theinvestments we make for our clients, and to provide ourview on where we believe policy change may be needed.
We aim to be involved in policy change impacting ourinvestments where appropriate and ensure that our views
are aligned with the best interests of our clients and wider
society. We also hold to account those responsible for the
management and oversight of companies we invest in
for applying suitable controls over their policy influence, toensure they too consider the interests of wider society.

Impact of policy on abrdn
We seek to play a role in assisting policymakers as
they develop legislation and regulation that applies toour business. We recognise the importance of a wellregulated financial services sector and the need toensure that our clients receive the products and solutions
they expect. There are a number of ongoing policy andregulatory developments that are relevant to our business,
including emerging sustainability disclosure standards,
green taxonomies and transition pathways. We believe it isimperative that these regulations are well thought out andcarefully implemented in order to ensure that clients canbe comfortable that the products and solutions they use
do deliver the outcomes they expect, and we will continue
to work to assist the development and delivery of theseregulations. We also work closely with governments, third
sector and other organisations to develop policies andstandards that benefit our other stakeholders, including
our employees and communities.

Impact of policy on our clients
Many of our clients also operate in a regulated
environment and the services we provide assist them inmeeting their regulatory obligations. We believe that it isimportant for us to understand the legal and regulatory
frameworks that apply to our clients. Although we cannot
closely monitor all of the regulatory change which may
become applicable to them in the future, we endeavour
to maintain a close enough relationship with our clients toassist them in understanding the impact of the changes tothe regulations that apply to them.

Stewardship Report 2023

Industry standards
We seek to play a leading role in the markets and regionsin which we operate to develop and uphold the highest
standards relating to our industry. We believe that it isimperative that our industry operates to the highest
standards. In an industry that relies on trust, the role weplay in setting and achieving these standards are integral
to the service we provide to our clients.

How we get involved
We are willing to act collectively with other investors inseeking to protect and enhance shareholder value, or tootherwise address issues that are relevant to our clients’best interests. Common topics for collective engagement
include: succession planning, board composition andnominations processes, remuneration, audit and audit
tenders, strategy and performance, risk appetite andrisk management, human rights, labour concerns andthe environment.
In deciding whether or not to act collectively with otherinvestors, we take into account a range of factors, such as:. whether or not collective engagement is likely to be
more effective than unilateral engagement. the degree to which the objectives of the other investors
are aligned to our own. the need for confidentiality. the context of the investee company and, exceptionally,
the wider economy.

To help us effectively participate in collective engagement,
we maintain good working relationships with otherinstitutional investors. We also support collaborative
engagements organised by representative bodies andothers, when these are aligned with our clients’ interests.
We work with a number of organisations in order toparticipate in collective engagement. Examples of themost significant of these organisations include:. The Investment Association. The Council of Institutional Investors. The Investor Forum. The Asian Corporate Governance Association. The Principles for Responsible Investing. The Institutional Investor Group on Climate Change. Climate Action 100+
. The 30% Club Investor Group.

79Our corporate influence

Transparency and reporting
With increasing scrutiny and expectations from various
stakeholders, it is vital that we are transparent about our
stewardship activities and outcomes.
Our corporate purpose - enabling our clients to be better
investors - drives us to achieve the highest standards inour operations and in the investments we make, and toachieve our clients’ desired outcomes. In our reporting, we
aim to demonstrate the outcomes-orientated stewardshipand sustainable investment activities we undertake andto report on the exposures in the portfolios we manage on
behalf of clients. Transparent disclosure allows our clientsto understand their portfolios and to hold us to accountfor our consideration of ESG factors and our engagementwith investments.
We currently provide information on engagement
activities through various regular reporting
mechanisms, including:

Stewardship Report 2023

. Our annual Stewardship Report, which contains asample of engagements we conducted over the year,
including information on the reasons for engagement
and the outcomes delivered. Our fund-specificSustainable Investment Reports also provide visibilityof our active ownership efforts across individual client
portfolios.
. We are increasingly reporting more granular information
relating to our engagement activities upon request
and in-line with key industry initiatives, such as theInvestment Consultants Sustainability Working Group(ICSWG) templates in the UK. We provide details of
our engagement activity, the types of meetings held,
progress through the engagement lifecycle and more
information on the outcomes of our engagement.
The regulatory environment relating to disclosure of
ESG activities and sustainability continues to evolve.

80Our corporate influence

Sustainability reporting

Listed Company
ESG Principles &Voting Policies

Providing transparency on sustainability-related
performance and activities. Annual Stewardship Report that follows UK Stewardship
Code. Firm level Sustainability and TCFD report to reportagainst climate-related disclosure including our Net Zerocommitments at both corporate and investment level. Modern Slavery Statement detailing our work to mitigate
modern slavery risk in our operations and value chain. Entity and product level TCFD reports according to the

ClimatechangeUK FCA listing rules

Links
Additional information on our voting, position
statements and our position on sustainable investing
issues is available on our website

Social factors

Environment andsustainability

Engagement
PolicyRisk Integration

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81

Appendix

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82

Sustainability Council
Governance Structure Appendix
This relates to information found on page 24.
Strategy Groups

Role and remit

Sustainable Investing
Strategy Group (SISG)

Supports the development of the overall ESG and Sustainable Investment strategy across all asset classes. The crossfunctional group provides the relevant expertise and insight to pursue the best long-term outcomes for our clients from within
the Investment teams. The group is chaired by the Head of Sustainable Investing, it consists of the Heads of ESG of all asset
classes, Head of Active Ownership and Head of Sustainability Insights.

Climate Change
Strategy Group

It is the management forum for climate-related risks and opportunities in the Investments business. The group is responsible
for setting strategy and escalating material issues through our wider governance framework. The group meets quarterly andis chaired by our Head of Sustainability Insights & Climate Strategy. The group receives more technical climate insights forconsideration and decision making from the Technical Climate Working Group.

Sustainability
Research Forum

The Forum produces, discuss and promote delivery on research priorities set by the SISG and promote sustainability insightacross asset classes.

Sustainability
Standards Group (SSG)

The SSG’s remit is to uphold standards in abrdn’s investment process to ensure they stand up to scrutiny, reflect client
objectives and ensure rigorous internal standards with focus on screening and standard breaches (including potential casesof controversies). The SSG is chaired by the Head of Sustainable Investing and is composed of colleagues from the Investment
Sustainability Group and has representation from Product and Compliance.

Sustainability ProductStrategy Group (SPSG)The SPSG supports the development of our Sustainability Fund Range offered by abrdn. The cross- functional group provides
the relevant expertise and insight to guide the development of the existing range and new additions.
The group is chaired by the Global Head of Product Strategy and comprises of product, client and ESG asset classrepresentatives.

APAC and Americas
Sustainability Institutes

The Institutes’ mission is to set and manage the regional sustainability strategy, deliver regional-centric sustainability solutions
and insights, build local sustainable investing knowledge community and contribute to regional progress. The Institutes arechaired by the regional Heads of Sustainability Institutes.

Regulatory & Standards
Taskforce

The Taskforce assesses new regulatory developments and market standards across all abrdn investment businessjurisdictions with ad-hoc working groups to mobilise business engagement and understand implications for the business.
The Taskforce brings together colleagues from global Compliance teams, Public Affairs, Corporate Sustainability,
the Investment Desks, and the Investment Sustainability Group.

2nd Line ESG OversightForum

The Forum is responsible for globally centralising the implementation and oversight of sustainability controls across theInvestments business from a Risk & Compliance perspective. This group also serve as the compliance advisory function to
the business broadly on ESG-related compliance queries. A dedicated Monitoring & Oversight team operates a risk-based
programme, which incorporates sustainability related regulation, to provide assurance to senior management over theeffectiveness of controls to ensure regulatory compliance.

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83

Mapping to the UK
Stewardship Code Principles
UK Stewardship Code Principle

Page Number(s)Principle 1
Signatories purpose, investment beliefs, strategy, and culture enable stewardship that creates
long-term value for clients and beneficiaries leading to sustainable benefits for the economy,
the environment and society.
Principle 2
Signatories governance, resources and incentives support stewardship.
Principle 3
Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first.

5-11, 40, 62-63

12, 19, 22-25, 32, 64-65

76-77

Principle 4
Signatories identify and respond to market-wide and systemic risks to promote a well-functioning
financial system.

72-75

Principle 5Signatories review their policies, assure their processes and assess the effectiveness of
their activities.

13-15

Principle 6
Signatories take account of client and beneficiary needs and communicate the activities andoutcomes of their stewardship and investment to them.

66-71

Principle 7
Signatories systematically integrate stewardship and investment, including material
environments, social and governance issues and climate change, to fulfil their responsibilities.
Principle 8
Signatories monitor and hold to account managers and/or service providers.
Principle 9Signatories engage with issuers to maintain or enhance the value of assets.
Principle 10
Signatories, where necessary, participate in collaborative engagement to influence issuers.
Principle 11
Signatories, where necessary, escalate stewardship activities to influence issuers.
Principle 12
Signatories actively exercise their rights and responsibilities.

Stewardship Report 2023

20-21, 33, 40-46

69

28-31, 35-39

34, 79-80

28-31, 80-81

17, 53-60

84

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