ESG
2021

INVESTING ANNUAL REPORTHow ESG impacts our investment decisions

Sustainability With Substance™

Environmental, Social, and Governance (ESG) Annual Report. Issued May 2022.

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Environmental, social, and governance [ESG]factors can impact the sustainability andlong-term success of businesses. Identifying,
analyzing, and integrating information about
ESG risks and opportunities help enhance
our ability to make better investment decisions
and pursue better outcomes for our investors.
We also believe that our clients should be able
to invest in a way that aligns with their values
on ESG issues.”
Rob Sharps,
CEO and President,
T. Rowe Price| II

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Foreword

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2021 in Review

Proxy Voting

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Responsible Investing
Governance06

Our ESG Investing Approach
ESG Integration
Aligning to Global ESG Frameworks
ESG Accountability

14

ESG Integration in Action
Sustainable Agriculture
Plastics
Energy Transition
Impact Investing in an Era of Change
How ESG Helps Make Us Better Value Investors
Why ESG Factors Matter in Asia Credit

34

Focus Themes
Understanding ESG Ratings
The Road to Net Zero
Corporate Political Involvement

42

Corporate Engagement
2021 Engagement Activity

44

Proxy Voting
2021 Proxy Voting Activity
Shareholder Proposals in Focus

48

Collaborations
Collaborative Engagement

50

Resources
ESG Investment Resources
ESG Committee

53

Engagement Data
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OUR ESGJOURNEY
2021

Responsible Investing Indicator
Model (RIIM) Municipal Bonds
RIIM Securitized Bonds
Rollout of proprietary ESG rating
system for municipal bonds andsecuritized bonds
Socially Responsible Strategies
The firm launches its first socially
responsible strategies in Europe
ESG Reporting
Implemented portfolio-level
ESG reporting

2020

2018

RIIM Corporates
Proprietary ESG rating systemfor equity and credit rolled out

2017

Responsible Investing
Established in-house responsible
investing research capabilities(environmental and social)

2014

2008

2007
1

On March, 7, 2022, T. Rowe Price Associates, Inc.
(TRPA), transitioned 6 of our well-established U.S.
equity and fixed income investment strategies toa new, separate, SEC-registered U.S. investment
adviser, T. Rowe Price Investment Management. The
implementation and oversight of the RIIM for TRPA
and TRPIM differ. The TRPIM RIIM covers equity andcorporate bonds only.

“E” and “S” Research
Sustainalytics appointed as
specialized ESG data andresearch provider

2012

2010

Corporate Responsibility
Investment policy on corporate
responsibility established

RIIM T. Rowe Price Investment
Management, Inc. (TRPIM)1
RIIM developed to support
strategies managed by TRPIMRIIM Sovereigns
The firm rolls out proprietary
ESG rating system for sovereigns

2013

CSR Report
First Corporate Social
Responsibility Report issued

United Nations Global Compact(UNGC)
T. Rowe Price becomes a signatory

2019

TCFD Sponsor
Commenced sponsorship of the
Task Force on Climate-Related
Financial Disclosures

Sustainalytics
Sustainalytics ESG ratingsare embedded in company
note templates

Impact Strategies
T. Rowe Price launches equity and
fixed income impact strategies

Principles for Responsible
Investment (PRI)
T. Rowe Price becomes signatory
to the the PRI (an independent
investor initiative supported by, but
not part of, the United Nations)

Governance
Established in-house governanceresearch capabilities| 02

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The past year has been another eventful one at T. Rowe Price as we continued
to grow our ESG capabilities. We launched our first impact strategies and grew thenumber of investment staff dedicated to ESG analysis, as well as the technology
team that supports them. Ahead of the creation of our new wholly-owned investment
adviser, T. Rowe Price Investment Management, Inc. (TRPIM), we built a parallel
set of ESG capabilities, including a team of ESG specialists and a proprietaryrating framework. Last, following a strategic review, we decided to consolidate
responsibility for ESG under one Management Committee member and substantially
increase our investment in operational infrastructure dedicated to supporting
ESG. I’m excited to take on that role, with oversight of our ESG activities, including
investing, operations, and corporate undertakings.

ERIC VEIELResources

Foreword

Delivering excellence in financial performance and client service remain our primaryobjectives. We believe that integrating ESG into our investment process—evaluating
how ESG factors positively or negatively affect the performance of securities—can help
our portfolio managers make sounder decisions. In 2021, we fortified the year-end
evaluation criteria for analysts and portfolio managers around their effectivenessin using ESG to drive investment outcomes. The importance of considering thesefactors has been heightened by evolving legislative action to address issues suchas climate change and other social matters—which have accelerated dramaticallyin the wake of the coronavirus pandemic and the COP26 conference.
An increasing number of our clients are asking for investment products that featureenvironmental and/or social characteristics. Globally, we manage USD 95 billion1 insocially responsible and impact products that cater to these investors. While we intend
to grow the number of products with sustainable objectives, it is crucial they are basedon substantive ESG criteria. The level of excitement and growth in ESG-oriented
investment products in the asset management industry has been unprecedented, but
we are concerned about the potential for greenwashing—a lack of transparency
and substance behind the ESG promises of some participants in the marketplace.
Several jurisdictions are addressing ESG product classifications to tackle thegreenwashing problem. While regulators are demanding improved transparency on
ESG metrics, asset managers must deliver products with ESG merit. Doing this ischallenging, as environmental and social factors are complex and often not binary—
they are not easily broken down into a single rating or statistic. As a predominantly
active manager, we believe we are well positioned. Our analysts and portfolio
managers can thoughtfully and practically consider ESG data in the context of
their investment decisions, and our ESG specialist teams build value-added ESG
datasets to support them. We are committed to ESG investing with substance andbelieve our capabilities and offerings live up to this ideal.

Head of Global Equity
and CIO

We believe in
ESG investingwith substanceand believe ourcapabilities andofferings live up
to this ideal.

ESG-oriented products are vulnerable to greenwashing in part due to a lack of industry
standards. We are vocal advocates of standard setting in the ESG space, for both
policy-setting and industry-led initiatives. It is with this spirit that we recently decided tojoin the Net Zero Asset Managers initiative. We are excited to be a part of this important
initiative—and you can read more about our approach on page 39 of this report.

1

As at December 31, 2021. AUM includes assets managed by T. Rowe Price Associates, Inc.,and its investment advisory affiliates. AUM includes funds and separate accounts across all regions.

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2 0 21 I N R E V I E W

Responsible InvestingOver the past two years, we have seen three critical junctures that we believe will
have a lasting impact on the investment landscape—the coronavirus pandemic,
the UN climate change conference (COP26), and Russia’s invasion of Ukraine
in February 2022. These are stark examples of how the health of people andthe planet affect economic prosperity. All three are catalysts for international
cooperation. Yet, at the same time, we believe each will ultimately contribute to
deglobalization trends.
Globalization has been a defining dynamic over the past three decades, facilitatedby the liberalization of foreign trade and financial markets, the development ofsupranational regulatory bodies, and an acceleration of international expansion
by corporations. The World Bank estimates that around 50% of value chains haveglobalized and their adoption has contributed to lifting over 1 billion people
out of poverty.
However, momentum has stagnated over the past decade. Globalization’s
downsides and vulnerabilities are being more widely recognized—among themenvironmental degradation and national security. On the environmental front, global
value chains require more transportation, leading to higher emissions and excess
waste from the packaging of goods. On the security front, global value chains drive
hyper-specialization and are dependent on shared know-how and technology withpartners in the value chain—so any breakdown in trade relations can leave a country
in a vulnerable position.
The pandemic has forced many countries to look inward and provide social protection(usually in the form of jobs), while COP26 has the potential to drive an unprecedented
level of public and private spending to decarbonize the economy. It is our view thatthese twin pressures will prompt select parts of the global economy to re-localize.
Russia’s invasion of Ukraine was a bleak reminder to world leaders of how quickly
value chains can break down. Understanding the environmental and social dynamics
of affected industries gives our investment teams insights into how and when thismay occur—ultimately helping to put them in a better position to pick the winners
and losers.

MARIA ELENA DREW

Director of Research,
Responsible Investing

Globalization’s
downsides andvulnerabilities arebeing more widely
recognized—among
them environmental
degradation andnational security.

Of course, transitioning the economy will be much more efficient if investors
and regulators are able to adequately measure it. The level of disclosure ofenvironmental and social data has improved in the past year, but there is divergenceamong regulators on which data points will be required from corporations and thestandards they must employ when disclosing. Global alignment will be critical forinvestors to accurately measure ESG factors across multi-regional portfolios.

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GovernanceIn past editions of this report, our introductory letters have served to draw readers’attention to highlights of the prior year and lay out some expectations for the
coming one. In 2022, it is exceedingly difficult to make any predictions. The
Russian invasion of Ukraine, in addition to the devastating human toll, will continue
to reverberate across the investment landscape, upending investors’ assumptions
around energy security, supply and demand of fossil fuels, human rights, andgeopolitical stability, among many other themes. At this moment in time, there is nocertainty around the array of ESG matters that will emanate from current events, or
how they will manifest in the corporate and sovereign investments held by our clients.
As these events unfold, companies (and the boards that oversee them) continue
to face an ever-evolving landscape of ESG-related developments in other respects.
The pandemic stretches into its third year and continues to have a disruptive
impact across regions and industries. Increased regulation on ESG disclosureand corporate governance is spreading quickly across major markets. A rise inengagement by employees and customers across a multitude of social issues has
prompted companies to reexamine whether their corporate values, their publicstatements, and their political advocacy are properly aligned. Pressure continues
to grow on corporate issuers—and chief executive officers in particular—to speakout on social and environmental issues that are important to the companies’ key
stakeholders.
Perhaps not surprisingly, the use of shareholder resolutions has grown as amechanism for stakeholders to harness investors’ voting power to express
perspectives on human capital issues, climate risk, supply chain, political spending,lobbying, ethical use of technologies, the energy transition, proper alignment of
incentives, and boards’ oversight of all these issues. The evidence indicates thesetrends will gain even more momentum this year. As we explain on page 44 of thisreport, T. Rowe Price continues to apply a highly contextual, company-specificapproach to arrive at our proxy voting decisions on these matters.
In addition to the growing body of ESG regulation globally, there are currently
numerous securities rule amendments proposed in the U.S. market that could havea significant impact on liquidity, shareholder activism, executive incentive programs,
and investors’ ability to assess climate risk. T. Rowe Price is fully engaged in the
public discussion around these proposed changes. Through direct advocacy andparticipation in investor associations, in 2022 we intend to continue to make thecase for timely, relevant disclosures and basic investor protections that promotefairness, liquidity, and resilience in our capital markets.

DONNA ANDERSONHead of Corporate
Governance

Perhaps not
surprisingly, theuse of shareholder
resolutions hasgrown as amechanism forstakeholders toharness investors’
voting power...

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ESG Integration
Environmental, social, and governance (ESG) analysis is one ofmany building blocks that make up our global investment researchplatform. We have built specialist teams and technology to evaluate
and integrate ESG factors across a range of asset classes.

Three Tenets of ESG Integration
INTEGRATED§ ESG analysis is embedded in theinvestment process.
§ Analysts and portfolio managers
are responsible for integrating
ESG factors into decision-making.

MATERIAL

COLLABORATIVE§ Specialists in ESG andregulatory research support
integration.
§ They work with analysts andportfolio managers to deepen
insights into significant ESG
issues.

§ ESG research is targeted formateriality.
§ We focus on ESG factors weconsider most likely to havea material impact on theperformance of the investmentsin each portfolio.

ESG Specialists
A team of 18 investment professionals (as of March 31, 2022) is dedicated toenvironmental, social, and governance research. They are organized across three
specialist teams—responsible investing (RI), governance, and regulatory research.
Each helps our analysts and portfolio managers identify, analyze, and integrate theESG factors we consider most likely to have a material impact on an investment’s
performance.
Our ESG specialist teams are supported by an operations team focused on proxyvoting execution and a technology team focused on ESG data integration.

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Responsible Investing Indicator Model (RIIM)
Compared with traditional financial data, integrating ESG factors into the investment process brings distinct
challenges. This is because many ESG factors are qualitative in nature and due to many quantitative data sets
being underdeveloped (i.e. limited disclosure and lack of standardization).
To address these issues, we developed the Responsible Investing Indicator Model—our propriety framework
designed specifically to help portfolio managers and analysts integrate ESG factors into their investment process.
RIIM has two key advantages:

Broad, proactive coverage
RIIM proactively searches large universes of ESG
data and presents an easy-to-digest profile of a
specific security, portfolio, or benchmark.

Systematic evaluation
RIIM provides a systematic framework for measuring
and comparing the ESG characteristics of individual
securities and portfolios.

RIIM frameworks are tailored across asset classes, covering equities and corporate bonds, sovereign bonds,
municipal bonds, and securitized bonds.

RIIM EQUITIES AND CORPORATE BONDS§ Creates a responsible investing profile forapproximately 15,000 companies and issuers.1§ Creates a responsible investing profile forapproximately 200 sovereign issuers.1§ Provides our portfolio managers and analysts with aframework to measure ESG factors in a systematicway—giving a common language for comparing the
ESG profiles of companies.

§ Provides our portfolio managers and analysts with aframework to measure ESG factors in a systematicway—giving a common language for comparing the
ESG profiles of sovereign issuers.

§ Framework leverages external quantitative datasets
to scan for factors that could positively or negatively
influence our investments.

§ Framework leverages external quantitative datasets
and our own issuer research.

§ After the quantitative analysis, ESG specialists
conduct fundamental research on select companies.

§ Sovereign RIIM scores are incorporated into theoverall sovereign issuers’ scores, which include
factors such as gross domestic product, inflation, andother traditional factors.

RIIM MUNICIPAL BONDS

RIIM SECURITIZED BONDS§ Also incorporates datasets we have built in-house.

1

RIIM SOVEREIGN BONDS§ Municipal bond analysts create an ESG rating for
issuers by evaluating specific criteria for individual
issuers.

§ Securitized bond analysts create an ESG rating for
issuers by evaluating specific criteria for individual
issuers.

§ Municipal bond analysts conduct research in-house,leveraging external data sources as well as their own
direct research.

§ Securitized bond analysts conduct research in-house,leveraging external data sources as well as their own
direct research.

§ Environmental and social analysis leverages
geospatial research tools.

§ Where there is overlap on issuers, the securitizedbond analysts can leverage RIIM scores from otherasset classes.

As of April 2022.
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A three-step process works to proactively identify ESG factorsthat may positively or negatively impact an investment thesis.
Our process for identifying, analyzing, and integrating ESG factors for equities and corporate
bonds is illustrated below. Variations to the framework exist for other asset classes such as
sovereign, municipal, and securitized bonds.

1

IDENTIFICATION
Data sources: Sustainalytics, T. Rowe Pricedatabases, and company reports.
Data inputs: selected based on theirmateriality.
Data categorization: data inputs allocatedto one of 23 categories, resulting in aweighted category score.
ESG profile: category scores are assigned
to one of three key pillars—environment,social, or governance—to produce an overall
RIIM score.

FUNDAMENTALOVERLAY

2

DATA INPUTS

23

Securities flagged in RIIM undergo
fundamental analysis by the responsible
investing team, including engagement
and proxy voting recommendations.
FUNDAMENTAL RIIM SCORE*(500–700 companies annually)

RIIM is currently able to analyze the ESG
profile of approximately 15,000 companies
and issuers.

200+

ANALYSIS

3

CATEGORIESINTEGRATION
Analysts and portfolio managers
incorporate ESG factors (as appropriate
to their strategy) into: Investment thesis
 Company ratings
 Price targets

 Engagements
 Position sizing Proxy voting decisions

Research
Management
SystemEnvironment

SocialGovernance

Company X

RI Analysis

QUANTITATIVE RIIM SCORE*(Approx. 15,000 companies)

For illustrative purposes only. As of April 2022.
*Green (circle) indicates no/few flags, amber (square) indicates medium flags,
and red (triangle) indicates high flags.

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Evaluating ESG-Labeled Bonds
The extraordinary growth of ESG-labeled debt issuance in recent years has driven a needfor more robust evaluation of the environmental and social credentials backing up theseissuances. Given the nascency of the ESG-labeled bond market, we have seen wild variationsin the quality of green, social, ESG, and sustainability-linked bonds.
These bonds generally price at a premium (often referred to as the “greenium”) and arepurchased by investors specifically looking to orient fund flows toward sustainable activities.
So, it is vital that issuers provide adequate evidence and are accountable for delivering on
their sustainable objectives.
We have built our own proprietary framework for evaluating the credentials of ESG-labeledbonds. Our ESG bond framework provides more robust analysis and ongoing monitoringof bonds within this category.

ESG-Labeled Bonds—Evaluation Framework

ISSUER ESG PROFILE§ RIIM score§ Environmental and social
commitments

POST-ISSUANCEREPORTING§ Detail on reporting plans§ Availability of audit report forallocation and/or impact reporting

ESG-Labeled
Bond

USE OF PROCEEDS§ Credibility of use of proceeds
or sustainability performancetargets (SPTs)§ Unallocated proceeds§ Refinancing§ Time frame§ Provisions for unmet SPTs

FRAMEWORK AND
STANDARDS§ Alignment to International CapitalMarket Association (ICMA)§ Second-party opinion verification§ Governance structure for project
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Identifying Impact Investments
In 2021 we launched our first impact strategies. These investments embed sustainableobjectives alongside financial performance.
All investments in our impact strategies start with an assessment of their alignment with thedelivery of positive environmental and social impacts. This considers both materiality andmeasurability. To aid this assessment, we have built a proprietary framework which we call our
Impact Lens. This framework helps to ensure we deploy a consistent standard for identifying
impact activities, which feature three impact pillars and eight sub-pillars outlined below.

1

Climate andResource
Impact2Social Equity
and Qualityof Life3

Sustainable
Innovation and
Productivity

ReducingGreenhouse
Gases

Enabling
SocialEquitySustainable
Technology

Promoting
Healthy
Ecosystems

Improving
HealthBuilding
Sustainable
Industry andInfrastructure

Nurturing
Circular
Economies

Enhancing
Qualityof Life

We also leverage our own RIIM analysis and an Impact framework to ensure wecomprehensively evaluate the potential of significant harm by a prospective investment,alongside other ESG risks. Lastly the use of an exclusion list helps us avoid certain areas of
the global economy that we do not believe generate positive impact.
Importantly, generating impact goes beyond simply owning certain types of companies.
It draws on our efforts in active ownership and encouraging change through impact-oriented
company engagements and proxy voting.

T. Rowe Price uses a proprietary custom structure for impact pillar and sub-pillar classification.
Impact strategies may not succeed in generating a positive environmental and/or social impact. A strategy’s incorporation of environmental
and/or social impact criteria into its investment process may cause a strategy to perform differently from a strategy that uses a different
methodology to identify and/or incorporate environmental and/or social impact criteria or relies solely or primarily on financial metrics.
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Aligning to Global ESG Frameworks
United Nations Sustainable
Development Goals
The UN Sustainable Development Goals (SDGs) area blueprint for a more sustainable world. Signatory
countries are expected to establish a nationalframework for achieving each of the 17 SDGs.
While the SDGs are a tool to allow countries toimplement sustainability regulations, they are also
commonly adopted as a framework for identifying
ESG-related pressure points that can impact
corporate and other securities. Indeed, the goals
are represented across the range of factors that weanalyze within RIIM.
Companies are likely to face greater scrutiny in relation
to the sustainability objectives of the SDGs over time.
This could include greater regulatory burdens, taxation,
litigation, and/or consumer dissatisfaction. Conversely,companies that provide solutions are likely to have much
more sustainable business models. It makes sense,
therefore, that our RIIM analysis is aligned with the SDGs.

United Nations Global Compact
T. Rowe Price is a signatory to the United Nations
Global Compact (UNGC). Established in 1999, the
UNGC has 10 principles built around human rights,
labor standards, the environment, and anticorruption.
In addition to capturing whether companies are
signatories to the UNGC, RIIM measures UNGC
values at multiple levels:§ Human Rights and Labor Standards: Managementof human capital is assessed through supply chain
analysis for human rights violations, as well as anevaluation of employee treatment that looks at laborrelated incidents, accident rates, and other factors.
§ Environment: This is assessed via energy use
and emissions, water and waste outputs and targets,sustainable sourcing of raw materials, and endproduct sustainability and impact on the environment.
§ Anticorruption: Programs in place and company
track records are evaluated within the model’s
ethics analysis.

Sustainability Accounting Standards
Board (SASB)
T. Rowe Price is a member of the SASB Alliance.
We advocate for our investee companies to utilize
the reporting framework.

Task Force on Climate-Related
Financial Disclosures (TCFD)
T. Rowe Price is a supporter of the TCFD. We
advocate for our investee companies to utilize
the reporting framework.

International Capital Market
Association (ICMA)
We adhere to ICMA’s Green Bond Principles, Social
Bond Principles, Sustainability Bond Guidelines, andSustainability-Linked Bond Principles frameworks
for the evaluation of sustainable bonds.
Source: United Nations
The trademarks shown are the property of their respective owners.
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ESG Accountability
Accountability for ESG Starts at the Top

ESG specialists
report to the Boardof Directors on anannual basis.

ESG
specialist
teams
report into
membersof theManagement
Committee.

T. Rowe Price Group
Board of Directors

T. Rowe Price Funds/Trusts
Board of Directors/
Management Companies/
Investment Advisers

ESG Committee
provides a reporton proxy voting,exclusion policies,
and procedures.

Management Committee
Oversees T. Rowe Price corporate
strategy and implementation

Investment Steering Committees
U.S. Equity, International Equity, Fixed Income, Multi-Asset
Oversee investment activity, including T. Rowe Price investment
products and strategies and implementation of ESG integration
across the investment platform

ESG Committee
Oversees ESG integration activities, including framework of ESG policies,
proxy voting, and exclusion lists

Investment Platform
ESG Specialists
support analysts andportfolio managers in
the integration of ESG
factors

Investment Analysts
are accountable for
integrating ESG factors
into their research
process, investment
thesis, ratings, targets,and engagements

Portfolio Managers
are accountable for
integrating ESG factors
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The Nominating and Corporate Governance Committee takes
an active role in engagement with T. Rowe Price’s investment
teams and other stakeholders on ESG matters. We also oversee
the sustainability initiatives of the corporation. In 2021, weinvested in additional human capital and technology resourcesin these areas. We also upgraded our level of transparency in
our Corporate ESG Report. This is one way we hold ourselves
accountable for the commitments we have made in the areasof responsible investing, environmental impact, community
engagement, diversity, equity, and inclusion.
Dr. Freeman Hrabowski III
Chair, Nominating and Corporate Governance Committee

T. Rowe Price Group
Board of Directors
WILLIAM J.
STROMBERG

ROBERT W.
SHARPSGLENN R.
AUGUST

MARK S.
BARTLETT

DR. FREEMAN
A. HRABOWSKI III

ROBERT F.
MACLELLAN

EILEEN
ROMINGEROLYMPIA J.
SNOWESANDRA S.
WIJNBERGALAN D. WILSON

Non-Executive Chairof the Board, T. RowePrice Group, Inc.

MARY K. BUSH
Chairman, Bush
International, LLC

ROBERT J.
STEVENS

Retired Chairman,
President, and Chief
Executive Officer,
Lockheed Martin
Corporation

DINA DUBLON

Retired Executive
Vice President andChief Financial Officer,
JPMorgan Chase& Co.

RICHARD R.
VERMAGeneral Counsel andHead of Global Public
Policy, Mastercard

President, Universityof Maryland,
Baltimore County

Former Partner andChief Administrative
Officer, Aquiline
Holdings LLC

Chief Executive Officer
and President, T. RowePrice Group, Inc.

Non-Executive
Chairman, Northleaf
Capital Partners

Founder and Chief
Executive Officer, Oak
Hill Advisors, L.P.

Former Senior
Advisor, CamberView
Partners

Retired Managing
Partner, Ernst & Young

Chair and Chief
Executive Officer,
Olympia Snowe, LLC

Retired Executive
Chairman, McCormick& Company, Inc.

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E S G I N T E G R AT I O N I N AC T I O N

Integration in Action—
Circular Economies

The vast majority of economic activities are built ona linear model, where raw materials are taken fromthe earth, used to make products, and eventually
discarded. Economic and global population growth
have created impacts that mean this linear modelcannot be sustained. If global economies are
to prosper and support the world’s burgeoning
population, a shift to a circular economy is needed.
The circular economy is based on three principles—
eliminating waste and pollution, circulating products
and materials, and regenerating nature. It is
underpinned by a transition to renewable energy
and materials, helping to decouple economic
activity from the consumption of finite resources.

In this ESG Integration in Action
section, we demonstrate how
our in-house research andstewardship activities evaluate
three principal themes within
the circular economy:
SUSTAINABLE
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Resources

Sustainable Agriculture
Sustainability in the agricultural sector is a challenging
web of considerations. On the one hand, agriculture
accounted for 18.4% of global greenhouse gas (GHG)
emissions (in 2016),1 alongside ecosystem loss, andland degradation. It also accounts for 70% of all
freshwater withdrawals2 and is the largest contributor
to nutrient runoff (a process that creates toxic algal
blooms as well as “dead zones” in aquatic ecosystems).
On the other hand, agriculture is a powerful force forgood. It provides the food we all need to survive andhas an outsized role in reducing poverty.
The United Nations forecasts food demand to increase
more than 50% by 2050, if the global population grows
to an expected 9.8 billion (from 7.7 billion in 2021)
and incomes increase across emerging markets.
As investors, we can play a role in directing capital
toward agricultural projects that can help close thatfood gap, but we also must ensure that our investment
is being deployed sustainably. Investing in the same
agricultural practices of the past 50 years will only
serve to exacerbate the sector’s negative impacts—
eventually leaving both society and investors to suffer
the consequences.

Increasing food production by more than 50% withouta radical change in traditional farming practices would
require an enormous amount of land conversion
and a sizable increase in GHG emissions. Neither iscompatible with limiting global warming to a maximum
target rise of 1.5°C. Indeed, most scenarios imply that
agricultural emissions need to contract by half from2016 levels, alongside reforesting 585 million hectaresof land.
There are a range of sustainability issues that we
believe will impact companies, and each can vary
substantially in how they impact the business (suchas a binary event or compounding pressures). For
example, a food company may face earnings volatility
driven by a commodity shock resulting from physicalclimate risk, or it may face a steady, gradual shift inconsumer preferences.
At T. Rowe Price, our equity and credit analysts consider
sustainability issues related to agriculture, forestry, andother land use (AFOLU) as part of their fundamental
investment research. Often, they receive support from
our ESG specialists when considering how AFOLU
issues may impact specific industries or securities.

Greenhouse Gas Emissions by Source (2016)3
AGRICULTURE, FORESTRY, AND OTHER LAND USE
Livestock and Manure (5.8%)
Agricultural Soils (4.1%)

18.4 %

Crop Burning (3.5%)
Deforestation (2.2%)
Cropland (1.4%)

5.2
%

73. %
2
Energy%3.2

Industry
Waste

Rice Cultivation (1.3%)
Grassland (0.1%)

Climate Watch, The World Resources Institute (2016)—most recent data available
World Bank (2020)3
Source: Our World in Data (September 2020). Data as at 2016—most recent available.
1
2

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Engagement
Data

Sustainable Agriculture in RIIM
In addition to our investment analysts’ fundamental research, sustainable agricultural
factors are systematically identified in our Responsible Investing Indicator Model(RIIM). They are key factors in our ESG analysis of the food, beverage, and related
retail industries and the chemicals sector. They also come into play in sectors
contributing to new agricultural technologies like industrials and information
technology.

Sustainable Agriculture
Factors Featured in RIIM
Primary agriculture, forestry, and other land use(AFOLU)-related data inputs (non-exhaustive list)

SUPPLY CHAIN

WATER USE

Land use andbiodiversity incidents

Water intensity
Water management
programs

Supplier environmental
programs

RAW MATERIALSESG ACCOUNTABILITY

Sustainable agriculture
programs

Reporting standards
Board accountability

Roundtable on
Sustainable Palm Oilcertified palm oil sourcing

Performance targets
Executive committee
accountability

Animal welfare

ENVIRONMENTPRODUCTSUSTAINABILITYLAND USE
Biodiversity programs
Forest certifications

Green revenue (sustainableagriculture, etc.)

Deforestation programs

Brown revenue (fertilizer)

Land use andbiodiversity incidents| 16

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Building a RIIM Profile—Bunge (Case Study, June 2021)
Evaluating a company’s practices concerning
sustainable agriculture isn’t always straightforward.
Given the scale, complexity, and diversity of agricultural
supply chains, we regularly see evidence of corporate
management of the issues coupled with controversies.

to Bunge’s exposure to deforestation controversies.
Its environment and social scores also fell toward thebottom of green-rated territory.
RIIM puts a high level of materiality (the ESG factors
we consider to matter most) on the company’s
supply chain management (both environmental andsocial), as well as raw materials procurement, productsustainability, and society and community relations.
RIIM flagged nongovernment organization (NGO)reports alleging multiple incidents of deforestation andbiodiversity loss throughout the company’s supply
chain, especially in sensitive regions of South America
and Indonesia. RIIM also pulled in quantitative data
evidencing Bunge’s supply chain management
practices, which we fortified with our own fundamental
assessment and stewardship activities.

In 2021, we found one company, Bunge, in such asituation. Bunge is an American agribusiness withinternational operations in soybean exports, foodprocessing, grain trading, and fertilizer. External ESG
ratings providers took very different views on thecompany, with one giving Bunge top marks (AAArating) and another giving the company its secondworst possible rating (high risk). Our RIIM analysis,
meanwhile, rated Bunge as green overall with its scorehaving improved gradually over past years. However,multiple categories in our model flagged orange due

Bunge RIIM Profile
RIIM
INDICATOR— Not Material● No/Few Flags■ Medium Flags

1 High Flags● Operations

Environment■ End ProductSocialSustainable Agriculture Factors■ Supply chain (environment)■ Raw materials■ Energy and emissions● Land use● Water use● Waste● General operations■ Environmental product sustainability— Products and services environmental incidents● Human Capital● Supply chain (social)● Employee safety and treatment● Diversity, Equity & Inclusion (DEI)■ Society■ Society and community relations■ Social product sustainability■ End Product— Product impact on human health and society■ Product quality and customer incidents

Governance● Business ethics● Bribery and corruption■ Lobbying and public policy■ Accounting and taxation● Board and management conduct

1 Remuneration■ ESG accountability● Data privacy incidents

The security identified and described is intended to illustrate the RIIM and does not necessarily represent securities purchased or sold by
T. Rowe Price. No assumptions should be made that the security analyzed, or other securities analyzed, purchased, or sold, was or will be
profitable. The RIIM profile is not a recommendation to buy or sell any security and is not indicative of a company’s potential profitability. It
measures ESG factors only. The RIIM profile is as of June 2021, is provided as a historical example only, and is subject to change.
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ENGAGING WITH BUNGEIn May 2021, we engaged Bunge on deforestation andsupply chain management. We wanted to better understandBunge’s ambitions and convey that deforestation andhuman rights are material in our investment analysis.
The Intergovernmental Panel on Climate Change estimatesthat agriculture, forest, and other land use (AFOLU)
accounted for about 13% of the world’s carbon emissions
and 23% total GHG emissions between 2007 and 2016.
AFOLU activities are the dominant contributors to
deforestation, which impedes the ability for the world’s land
sinks (forests, croplands, and wetlands) to absorb carbon
from the atmosphere. Between 2007 and 2016, natural
terrestrial carbon sinks are estimated to have offset 28% of
human-generated emissions.4

Agriculture, forest,and other land use
account for about
13% of the world’s
carbon emissions
and 23% total GHG
emissions.4

OUTCOMEWe learned that Bunge had an ambitious target for a
deforestation-free supply chain by 2025, including legal
deforestation. The company established a palm oil
dashboard providing robust disclosure on its palm oil
mills and addressing accusations of deforestation or
biodiversity loss. Beyond disclosure, Bunge discussed its
engagement with suppliers, demonstrating a commitment
to cut ties with suppliers that fail to address breaches inpolicy compliance.
On social supply chain management, the company
demonstrated strong standards, but it scored poorly inthis category in RIIM due to shortcomings in applicability
to indirect suppliers and lack of audits. The score wasfurther compounded by repeated reports of forced andchild labor use among suppliers. Encouragingly, however,Bunge indicated that it plans to conduct a human rights
assessment to improve supply chain management andcommitted to supplier audits starting in 2021.
We were encouraged by the measures to eliminate
deforestation and human rights abuses in its supply chain.
As Bunge is an agribusiness, these are two significant
ESG risks we continue to monitor.
Before the company’s May 2021 annual shareholder
meeting, we had another opportunity to engage with
Bunge on the topic of deforestation. The company hadreceived a shareholder resolution seeking additional
reporting on its exposure to deforestation risk related tosoy production. As the company spoke with its largest
investors about the issue, the board understood ourinterest in additional disclosure on this topic and elected torecommend in favor of the shareholder resolution. With thecompany’s support, the resolution received overwhelming
support from 98% of shares voted.

4

Climate Change and Land, Intergovernmental Panelon Climate Change (IPCC), 2019.
The security identified and described is intended
to illustrate the ESG security evaluation process
and RIIM and does not necessarily represent
securities purchased or sold by T. Rowe Price. No
assumptions should be made that the security
analyzed, or other securities analyzed, purchased,or sold, was or will be profitable. This is not arecommendation to buy or sell any security andis for informational purposes only. The views andopinions above are as of June 2021 and are subject
to change.
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Collaborative Engagement on Food Sustainability
In 2021, AFOLU issues featured prominently across ourstewardship activities. We held 75 engagements with65 companies during the year covering issues such as
deforestation and sustainable agriculture.
These included collaborative engagements. One
was conducted through the Farm Animal Investment
Risk and Return (FAIRR) initiative, a global network ofinvestment organizations that actively engages with theworld’s largest food retailers and manufacturers about

ESG risks within the global food sector, particularly
those associated with intensive livestock production.
Another was conducted through the Emerging Markets
Investors Alliance (EMIA), a not-for-profit organizationthat enables institutional emerging market investors
to support good governance, promote sustainable
development, and seek to improve investment
performance in the governments and companies inwhich they invest.

PROTEIN DIVERSIFICATION

SUPPLY CHAIN MONITORING IN THE AMAZONIn a collaborative engagement, conducted through FAIRR,
we signed letters to many of the world’s major foodretailers urging them to grow their share of sustainable,plant-based proteins and build out their strategy.

In a collaborative engagement, conducted through EMIA,
we sought to:

The companies we engaged with included Conagra,
Costco, Walmart, Wm. Morrison, Carrefour, Casino, KerryGroup, Sainsbury, Ahold Delhaize, Nestle, Tesco, Unilever,
Woolworths, Kraft Foods, Kraft Heinz, and Coles.
Protein diversification involves the transformation of
portfolio composition by shifting away from an overreliance on resource-intensive animal proteins toward
lower-impact protein ingredients and products. These
include plant-based, cell-cultured, fungal-based, andwhole-plant alternatives to meat, dairy, seafood, and otheranimal proteins.

§ Engage protein producers about material ESG issues§ Provide protein producers with a forum to communicate
their policy intentions and actions and receive feedback§ Highlight hurdles to the implementation of best practices
and discuss the role investors can play in changing
government policy
The companies included JBS, Marfrig, and Minerva.

We have been pleased to see many of these companies
set board-level, public commitments around portfoliotransformation.

Ruminant livestock (cattle, sheep, and goats) account forroughly half of agriculture’s greenhouse gas emissions
and use about two-thirds of global agricultural land.5
Deforestation has caused almost half of Brazil’s carbon
emissions in the last 30 years, with the loss of more than
780,000 square kilometers of forest and 2,000 species.
Pasture expansion for cattle production has been linked
to 80% of clearing.6

All 25 companies within FAIRR’s scope of engagement now
recognize protein diversification as a material issue for theirbusiness, compared with none five years ago.

The engagement informed our research and allowed us
to impart the message that supply chain monitoring is amaterial factor in our investment analysis for the sector.

The specific securities identified and described are for informational purposes only and do not represent recommendations.
Creating a Sustainable Food Future, World Resources Institute (July 2019)6Cattle ranchers and deforestation in the Brazilian Amazon: Production, location, and policies, Skidmore, Moffette, et al (2021)
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Plastics
Plastics can play a positive role in some sustainability
issues, including reducing food waste, reducing
product weight to enable more efficient transportation,
improved building materials, or better hygiene.
However, their sheer volume of production and nondegradable nature means they have come to epitomize
the problems of the end-to-end or linear economy.
When thinking about the three principles of thecircular economy—eliminating waste and pollution,
circulating products and materials, and regenerating
nature—many tend to associate plastics with thefirst two. They view the plastics problem from theperspective of recycling and product life-cycle design.
Yet, plastics fundamentally violate the third principle
as they introduce a non-degrading substance into thenatural world.

Global Plastics Ultimate Disposal*

Ocean Leakage (2–5%)

12–14%

Incineration

10–15%

Recycled

25–30%

Land Leakage

40–45%

Landfill

Less than 2% of plastics currently come from biobased materials. The remainder are derived fromfossil fuels, which are broken down with energyintensive processes and then mixed with chemicals
to create different types of plastics. The resulting
synthetic product is not found anywhere in nature anddoes not easily decompose. Plastics can break into
smaller parts but cannot break apart. The large-scale
production and poor practices around disposal havemade plastic a ubiquitous substance in nature—somuch so that plastics are a marker of the current
geological era7 and have given rise to a new microbial
habitat known as the plastisphere.8
After climate change, plastic pollution may be the next
biggest environmental crisis. Due to the multiple andcascading risks posed by plastic pollution, it is seen asa multiplier that can act in tandem with other stressors
like climate change and overexploitation of marine
resources to cause far greater damage than if eachoccurred in isolation.9
The Ellen MacArthur Foundation estimates that 95%
of plastic packaging material is lost to the economy
after its first use. As such, plastic packaging has
become an enemy of the circular economy and has
prominently entered the crosshairs of consumers andregulators. Over one-third of global plastic use is in the
packaging sector. As regulators address the plastics
issue and consumers become more aware of thesustainability pressures plastic packaging presents,
we expect the single-use plastics space to be radicallyreshaped in the coming decade as companies use
alternative materials (paper, aluminum, etc.), innovatebetter plastics (bioplastics, etc.), and use lesspackaging material altogether.
International collaboration plays a crucial role in thefight against plastic pollution. That’s why the outcomeof a recent United Nations Environment Assembly is apositive step forward toward tackling the problem. In
March 2022, 175 countries agreed to draw up a global
and legally binding treaty to end plastic pollution—witha view to finalizing the treaty by the end of 2024.

As of December*Source:
The New2018.
Plastics Economy, Ellen MacArthur Foundation, 2018. Most recent data available.
7 Source: The New Plastics Economy, Ellen MacArthur
Zalasiewicz, et al. (2016)
8 Foundation, 2018
Amaral-Zettler, et al. (2020)
9
United Nations Environment Programme (2021). From Pollution to Solution: A global assessment of marine litter and plastic pollution.
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Plastics in RIIM
One of our internally developed databases feeding
our RIIM analysis is devoted to packaging statistics
and targets for consumer products companies. The
database has a strong focus on household andpersonal care (HPC) companies, where consumer
preferences have been most pronounced. Over halfof the HPC companies in the MSCI All Country World
Index specifically mentioned that they were motivatedto improve the sustainable profile of their products due
to increased consumer interest in the environmental
footprint of their purchases. Many see sustainable
packaging as a way to meet consumer expectations.
We expect companies that disclose targets andprogress related to sustainable packaging will likely
see greater growth and returns in the long run asconsumers increasingly consider the environmental
impact of packaging in purchasing decisions. These
companies will also be less financially impacted byregulation and taxation that seek to restrict plastic use
and increase recyclability.
As an input into RIIM, data related to packaging
targets are readily available to our equity and credit
analysts covering the consumer products industries.
Importantly, we recognize that the change needed toaddress the environmental crisis created by plastic
packaging is not as simple as switching materials, nor
can the long-term solution sit squarely with recycling.
Understanding a company’s long-term packaging
plans is an important part of our analysis.

Plastics-Related
Factors Featured
in RIIM
Primary plastics-related data inputs(non-exhaustive list)

RAW MATERIALS
Packaging performance
Packaging targets
Raw material fromsustainable sources

ENVIRONMENTAL
PRODUCTSUSTAINABILITY
Green revenue (nurturing
circular economies)

ESG ACCOUNTABILITY
Reporting standards
Performance targets
Executive committee
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Many leading companies within the HPC industry expect to complete full overhaulsof their packaging between 2025 and 2030. Businesses have responded to changing
consumer preferences and expectations by switching to alternative materials
such as aluminum or paper. Meanwhile, others have adopted new policies, likeeliminating plastic bags entirely, as they simultaneously make other changes to theirproducts or supply chains. More meaningful changes will come with the help oftechnological breakthroughs and rethinking of the packaging equation (including
reusable/refillable solutions).

Plastic-Intensive Industries Are Responding in Different Ways10
Within the HPC sector, innovations are broadly focused on three different outcomes

DirectPackaging without anessential function iseliminatedSubstitution
Plastic packaging is replacedwith more easily recycled orcomposted alternatives

EL
IN

I
AT

Indirect
Packaging with an essentialfunction is replaced with aninnovative solution

CI

RC

UL

AT
I

ON

ON

Plastics Recycling
Plastic packaging isbroken down to makenew products (open-loop
or closed-loop)

IM

Plastics Composting
Plastic packaging isdecomposed in a homeor industrial composting
facility

REUSE

Refill at Home
Reusable container
is refilled at home

10

Refill on the Go
Reusable container
is refilled away fromhome/in store

Return From Home
Packaging is pickedup from home by acollection service

Return on the Go
Users return the
packaging atstore/drop-off point

B2B Packaging
and Reuse
Inter-industry
reuse systems

Source: Original diagram sourced from the Ellen MacArthur Foundation website, September 2021. The diagram is reproduced by
T. Rowe Price specifically for inclusion in this article, and its use does not reflect the views of the Ellen MacArthur Foundation, nor does it
reflect or imply the foundation’s endorsement.
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Plastics and Stewardship Activity
In 2021, we engaged with 27 companies on the topic of single-use plastics andpackaging. These companies were based in the Americas; Europe, Middle East,
and Africa; and Asia Pacific regions, and included sectors such as consumer,
industrials, materials, and energy.
CompanyCountry

Date

Myers Industries

U.S.

January

Hillenbrand

U.S.

February

Alibaba Group

China

March

Avantium

Netherlands March

DanoneFranceMarch

Indorama Ventures

ThailandMarch

Turkiye Sise ve Cam Fabrikalari

TurkeyMarchAlicorp

Peru

April

British American Tobacco

UK

April

Budweiser Brewing Co. APAC

Hong Kong

April

Estee Lauder

U.S.

May

Dollar General

U.S.

June

Galaxy Entertainment Group

Hong Kong

June

BraskemBrazilJuly

Britvic

UK

July

Applied Materials

U.S.

October

China Mengniu Dairy Co.

Hong Kong

October

Petco Health & Wellness Co.

U.S.

October

PTT Global Chemical

Thailand

October

Red Robin Gourmet Burgers

U.S.

October

RepsolSpain

October

Thai Oil

Thailand

October

Westlake

U.S.

October

Fortinet

U.S.

November

Kraft Heinz

U.S.

November

Oxford Nanopore Technologies UK

NovemberCarnival Corp.

DecemberU.S.

The specific securities identified and described are for informational purposes only and do not represent securities purchased,sold or recommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
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Energy Transition
A cornerstone of the circular economy is that it needs
to be underpinned by a shift to renewable energy.
Energy transition is an issue that permeates all sectors
and asset classes.
To limit global warming to a maximum rise of 1.5°C,
carbon dioxide emissions must be contained todefined levels over a period of time—this is known as
the world’s carbon budget. Assuming a two in threeprobability of staying within the 1.5°C scenario andwith greenhouse gas emissions at 2021 levels, theworld’s carbon budget will be exhausted in just six
years. The figure jumps to 16 years assuming a one inthree probability.
The finite nature of the carbon budget emphasizes
the urgency for the energy transition effort andthe need to bend the emissions curve quickly.
The upshot is that, to stay within a 1.5°C global
temperature rise, the world needs to reducegreenhouse gas emissions by 50% by 2030 andachieve net zero emissions by 2050.11

To stay within a 1.5°C global
temperature rise, the world
needs to reduce greenhousegas emissions by 50% by
2030 and achieve net zero
emissions by 2050.11
For Europe, Russia’s invasion of Ukraine has only
added to this sense of urgency, with the conflict
resulting in oil and gas price shocks and sparking
fears over security of supply from Russia.

long-term ESG implications, one thing has become
clear: The conflict has the potential to accelerate
the energy transition—particularly in Europe. Russia
accounts for 12% of global oil production and 18% of
global natural gas production.12 Given its proximity,
the European Union’s (EU) dependence on Russian
oil and gas supplies is high. In 2020, more than half ofRussia’s oil exports and about 85% of its natural gas
exports went to Europe.12
It is not easy to switch energy supply quickly without
incurring higher costs and hurting the economy.
However, the EU is arguably better positioned to do
so today given the availability of economical nonfossil fuel alternatives, more innovation in energy
consumption patterns, concerns that foreign energy
reliance could be used as a weapon, and consumerawareness of the climate and security crises.
This gives the EU a strong reason to push the energy
transition harder and faster. In our view, this will mean
increased investment in renewables and, perhaps
more importantly, in energy efficiency (such as smart
appliances and green buildings), electrification, andother innovations.
Several countries have been reconsidering their path
to reducing reliance on Russian oil and gas following
Russia’s invasion of Ukraine. However, steppingback from Russian gas raises salient questions overwhether there is an alternative to gas for building thebase for electricity supply. Nations can certainly ramp
up the growth of renewables and other fossil-freealternatives but will need to take a pragmatic approach
to changing the pace of phasing out legacy fuels—until
renewables, hydrogen, and storage technology canreliably and economically deliver. While this will mean
short-term disruption, the long-term outlook for clean
energy looks more positive.

The Russia-Ukraine conflict has proved deeply
concerning. First and foremost is the humanitariancrisis and the egregious impact that events have hadon the well-being of people caught in the midst of thecombat. While we continue to assess the overall,

Net zero means achieving a balance between the greenhouse gases put into the atmosphere and those taken out. This state is also referred toas carbon neutral.
12
Source: International Energy Agency (based on 2020 production levels).
11

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Focus
ThemesEnergy Transition in RIIM—
Disclosure Improvements in 2021
T. Rowe Price equity and credit analysts consider
energy transition as a key part of their normal
fundamental analysis. They draw upon the analysis
of our ESG specialists, who provide a more granular
view of the environmental characteristics of specificcompanies and industries. Areas of focus include
greenhouse gas (GHG) emissions; decarbonization
strategy; investment in renewable energy sources;
physical risks; environmental track record, such as oil
spills; and overall ESG accountability and transparency(particularly in relation to climate change). These
factors are systematically identified in RIIM.
In last year’s ESG Annual Report we wrote about a stepchange in corporate attitudes toward disclosure. The
tone of our interactions with company management
teams had changed dramatically, with more actively
seeking guidance on what ESG data to disclose andhow best to go about it. In 2021, we continued to see
improvement, with the level of reported data growing—particularly GHG emissions and other relevant climate
data. We also have seen an uptick in companies
setting net zero targets.

Corporate
Engagement

Proxy Voting

Collaborations

Resources

As of year-end 2021,
just under 60% of
securities in theequity and fixedincome benchmarksaligned with ourequity and corporatebond portfolios
reported scope 1-2
emissions.14

The improvement in disclosure has enabled an upgrade
to some of the quantitative data indicators that feed
into our RIIM analysis to measure performance in theenergy and emissions category. Whereas historically
we included factors related to emissions or renewableenergy programs, we can now focus analysis more
precisely on performance indicators (e.g., renewableenergy use), targets (e.g., scope and quality of emissions
reduction targets), and controversies/incidents.
At year-end 2021, roughly USD 1.2 trillion of our AUM
resided in portfolios holding equities or corporate
bonds.13 We found that just under 60% of securities
within the benchmarks of this universe were reporting
scope 1-2 emissions.14 (This calculation used theweighted average reported data for the benchmarksof our portfolios). For the equity benchmarks,
the figure was slightly higher than 60%, while theweighted average for the fixed income benchmarks
was dramatically lower, coming in at less than 20%. The
range of reported data was extreme across both asset
classes (4-93% for equity benchmarks and 3-77% for
fixed income benchmarks).

As at December 31, 2021. AUM includes assets
managed by T. Rowe Price Associates, Inc., andits investment advisory affiliates. Includes Oak Hill
Advisors (OHA).
14
Scope 1 (direct emissions from owned or controlled
sources), scope 2 (indirect emissions from thegeneration of purchased electricity, steam, or
cooling), scope 3 (all other indirect emissions).
Source: Sustainalytics. Analysis by T. Rowe Priceusing index data.
13

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Energy Transition in Stewardship Activity
In 2021, we held 207 engagements where greenhousegas emissions were a topic for discussion. We
continue to guide companies toward industry bestpractice disclosure standards—including advocating
for disclosures aligned to the Sustainability AccountingStandards Board (SASB) and the Task Force on
Climate-Related Financial Disclosures (TCFD). These
are globally recognized frameworks that emphasize
financial materiality. We also continued to emphasize
the importance of reporting of scope 1–3 GHG
emissions data.

Proxy voting played an important role in ourstewardship activities around energy transition in
2021. Climate-related shareholder resolutions wereprominent, particularly within high-impact industries,
such as the energy, industrials, and financials sectors.
According to data from sustainability organization
Ceres, there were 136 climate-related shareholder
proposals tabled between July 1, 2020, and March 31,
2021,15 with just under half of these progressing toa vote at the respective company annual general
meetings (AGM).

Climate-Related Resolutions—Voting Examples

ExxonMobil

AGM-May 26, 2021

T. Rowe Price Voted—For§ ExxonMobil faced a contested director election
and seven shareholder resolutions, six of which
related in some measure to environmental issues.
This highly unusual meeting was the result ofmany factors, not least being the company’s
general resistance to genuine investor engagement
and a perception by investors that it is an outlier on
climate transition strategy.
§ T. Rowe Price supported three of the four board
nominees proposed by the dissident investor. We
also supported a shareholder resolution seeking
independent board leadership, one for increased
shareholder authority to convene meetings, one
for climate scenario analysis reporting, and threeseeking better transparency on the company’s
lobbying on climate issues and general politicalgiving. We did not support a resolution brought
by an investor who opposes any efforts to mitigate
climate risk.
§ Apart from the anti-environmental proposal, all
the resolutions received strong support fromshareholders. In addition, three incumbent
directors were replaced.

15
16

Mitsubishi UFJ Financial GroupAGM-June 29, 2021

T. Rowe Price Voted—Against§ Kiko Network, a Japanese NGO,16 along withthree individual shareholders, filed a proposal
requesting that Mitsubishi UFJ Financial Group(MUFG) amend its articles to disclose a plan toalign the company’s strategy with the goals of theParis Agreement.
§ Subsequent to the filing of this shareholder
resolution, MUFG announced a Carbon Neutrality
Declaration, aiming for net zero emissions fromits finance portfolio by 2050 and in its own
operations by 2030. To facilitate this goal, MUFG
became the first Japanese bank to join the Net
Zero Banking Alliance.
§ T. Rowe Price is an active member of the Asian
Corporate Governance Association (ACGA). The
ACGA-hosted dialogue between the company andthe proponent, Kiko Network, informed our votedecision.
§ The company’s commitments meant that theresolution had effectively already been addressed,
so we did not support it. At the AGM on June 29,
2021, the item received 23% support.

As of March 31, 2021
Non-government organization. A nonprofit organization that operates independently of any government, typically with the purpose ofaddressing a social or political issue.
The securities identified and described are intended to illustrate the case-by-case analysis of climate-related shareholder proposals by
T. Rowe Price’s governance and responsible investing teams and do not necessarily represent all of the securities purchased or sold by
T. Rowe Price. No assumptions should be made that the securities mentioned were or will be profitable. This is not a recommendation tobuy or sell any security. The views and opinions above are as of the AGM date noted and are subject to change.
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The analysis of climate-related shareholder proposals
by our governance and responsible investing teams is
conducted on a case-by-case basis. To reach a voterecommendation, we consider:§ The specific circumstances of each company(including the current level of disclosure)

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Framework forAssessmentof Climate-Related
Action§ The company’s climate strategy§ The materiality of the issue for the company, i.e.,
the extent to which it relates to the company’s
operations
We are unlikely to support resolutions that areexcessively prescriptive (be they climate-related
proposals or otherwise), as this usually equates to the
proponent, in essence, attempting to micromanage
the company. Similarly, if we think that the company isalready taking sufficient action to address the statedconcerns, we will likely withhold our support.
While the nature of our assessment of a company’s
actions can vary according to the region andindustry, specific measures we consider include
those detailed on the right.
In 2022, T. Rowe Price plans to step up its current
voting against directors who fail in the oversight ofmaterial environmental, social, or governance risks.
Companies in sectors that are highly exposed tothe impact of climate change and that have failed todemonstrate sufficient preparedness for a low-carbon
transition will be in scope for a vote against the board
chair or other relevant committee member.

ASSESSLEVEL OF DISCLOSURE§ Identify if GHG emission disclosures are
TCFD-aligned.
§ At a minimum, report scope 1 and 2 GHG
emissions.

IDENTIFYEMISSIONS TARGETS§ Seek GHG emission reduction targets.
§ Ideally, targets are aligned with goals of theParis Agreement.

EVALUATE
CLIMATE STRATEGY§ Assess if company has a credible
decarbonization plan.
§ Best practice includes a net zero 2050
carbon emissions target (or national/
regional equivalent). A path to achieving
the target is key.

CONSIDER
ENGAGEMENT ACTIVITY§ Assess responsiveness to stakeholder
concerns, including willingness to engage
and reflect feedback.
§ Determine if company demonstrates robust
governance procedures around direct andindirect policy advocacy, including board
oversight.

For illustrative purposes only and subject to change.
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E S G I N T E G R AT I O N I N AC T I O N — P O R T FO L I O M A N AG E M E N T

Impact Investingin an Era of Change
How do you think of ESG factors within your investment process?
It is important to state at the outset that impact investing is not ESG integration,and it is also a different discipline from sustainable investing. It incorporates both,but takes it a step further. Impact investing’s modus operandi is to target positive,
measurable social and environmental impact, alongside an excess financial return
when compared with recognized global equity indices (for example, the MSCI AllCountry World Index). Impact investing directly aligns and measures investments
according to their ability to contribute to particular social and environmental outcomes.
We leverage our ESG integration process to help understand environmental andsocial risks, alongside the dynamics related to a company’s conduct. At the stocklevel, all our investments begin with a clearly defined positive impact thesis, which
proactively and systematically integrates ESG considerations. We believe thatESG factors aren’t tangential parts of a traditional investment thesis. Company
fundamentals, including the consideration of environmental, social, and governancefactors, play a critical role in the stock selection process.

HARI BALKRISHNA

Portfolio Manager,
Impact Investing

How important are ESG factors in the global equity market?
We believe that ESG is crucial to reaching the right investment decision. Largeshareholders especially can move the ESG debate forward by actively engaging
with companies on issues that are material to their activities. Many companies
are already moving to actively shift investments and policies to address distinct
regulatory changes and environmental and societal pressure points. Either throughcompulsion or a desire to influence positive change, these trends are rapidly
shaping the way companies behave, invest, and innovate.
However, if we aspire to accelerate these and other initiatives that target socialand environmental transitions, it is essential to fund them at scale and in a liquidmanner—so public equity markets will be critical to that effort. The enormity ofissues like the clean energy transition will not be possible without the backing oflarge and well‑funded publicly listed firms.

The enormity of issues
like the clean energy
transition will not be
possible without thebacking of large andwell‑funded publicly
listed firms.

Alongside investing in companies making distinct impacts as a direct consequenceof their actions, we aim to be additional through our stewardship program, which
includes company engagement and a custom proxy voting policy. In our view,
active engagement is a key to the ultimate delivery of impact. The journey to changetakes time, however, so a long‑term investment horizon is essential. Given the timerequired to achieve measurable environmental and social impacts, patience andresilience are key requirements to help monitor and evaluate change.

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Foundations to Building andManaging an Impact Portfolio
For illustrative purposes only.

MATERIAL

MEASURABLE

ADDITIONALRESILIENT

Stocks evaluatedbased oncorporations’activities andalignment to clearly
defined impact
criteria.

Impact outcomes
quantified
individually andcollectively totranslate impact
intentionality intoa measurement
framework.

Use of scale andresources to promote
and progress theimpact agenda.

In an era of
disruption andextreme outcomes,
positive change
has to be durable.
Learning, patience,and collaboration are
key to pursuing goodclient outcomes.

What are the ESG trends to watch withinglobal equities?
Excitingly, the opportunity to own businesses thatcreate a positive environmental or social impact isgreater than ever before in public equity markets,as companies evolve to address environmental andsocietal pressure points. Striving to be on the rightside of this societal and environmental change createsa real opportunity to select stocks that convey a
positive impact profile and, with it, the added return
potential that this can bring.
One way of targeting these types of impacts is toalign and anchor investments according to globally
recognized frameworks such as the UN SDGs. This
identifies pressure points and targets the companies
whose activities are working to address them by 2030.
The potential investment opportunity set that the
UN SDGs open is, however, vast and complex. Thismeans an active, high‑conviction, and forward‑looking
perspective is essential to screen, identify, and capture
desired positive impacts and to target the financial
returns they can generate.

We look for impact beyond the obvious. We are wellversed in areas such as renewables or health care,
but a range of market areas feature underappreciatedimpact. For example, they include industrial gases
companies solving our future decarbonization needs
with green hydrogen, health care firms that reducethe cost of and accelerate the pace of innovation, andcompanies that improve social equity through financial
inclusion and digital connections. We also look to own
companies that offer technological solutions to social
or environmental issues as well as those engaged
in smart city infrastructure or smart manufacturingbusiness models.

This is an illustrative example of how ESG factors could be incorporated into the investment process. The views expressed may differ fromthose of other investment professionals at T. Rowe Price.
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How ESG Helps Make
Us Better Value Investors
How do you think of ESG factors within your investment process?
Investors are increasingly alert to the impacts of environmental events linked toclimate change, social issues such as diversity and employee treatment, and theinfluence of regulatory change related to these and other ESG factors.
For value investors, this brings distinct challenges. Indeed, some would suggestthat the very nature of value investing—and the characteristics of the investment
universe—fall foul of some fundamentals commonly associated with ESG objectives.
Many of the industries that feature heavily in the value investment universe canscreen negatively on ESG factors, especially in areas like energy, materials, andutilities, which are historically high carbon emitters. But we will not achieve CO2
emissions reduction goals without their participation and improvement.
By integrating ESG factors into decision-making, new stock opportunities or risks
not fully appreciated by the market can be uncovered. Sometimes, the very featuresof stocks or sectors that make them laggards in the ESG space also mean that they
have the potential to make a powerful contribution as they develop technologies,
unlock resources, and channel finances that can help drive change.

SEBASTIEN MALLET

Portfolio Manager,
Global Value Investing

How important are ESG factors in the global value equity space?
We have long taken ESG considerations into account when investing in stocks.
It is our job to analyze risk and reward, and we can only do this to the best of ourability if we consider all the potential risks around any investment.
Relative to some other sectors or styles in the market, a greater proportion of ESG
laggards exist within the value space. Utilities, energy, industrials, and materials—
sectors that typically rank poorly in terms of environmental characteristics—makeup almost 90% of the carbon footprint of the MSCI World Index, according to
our internal models.
But while the companies that mine and generate energy may be responsible for muchof the pollution we are trying to combat, they are also integral to the transition process.
As value managers, we are in a unique position to help push for change. Rather thandivest from extractive industries (e.g., mining and energy), we can guide and supportchange. Starving companies of capital is not the answer. Our job as fundamental
stock pickers is to find companies that can thrive in this new world of cleaner energy.

Relative to someother sectors orstyles in the market,
a greater proportionof ESG laggards
exist within the value
space.

At T. Rowe Price, we have the benefit of significant resources, which allows us tocarry out thousands of company meetings every year. Discussing ESG helps us tounderstand management’s thinking and gives us an opportunity to voice concernsand encourage positive behavior. One of the key foundations to our investment successin recent years has been the ability to stay engaged with stocks during periods of
weak sentiment to help us potentially benefit from the transition to a better outlook.

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We are increasingly identifying ESG-related mispricing,where risks have been insufficiently discounted.
On the flip side, a company’s share price may havebeen punished for bad behavior historically, despite
evidence of progress toward improvement. We findthat companies that are working to better their ESG
standards will often eventually benefit from improved
investor sentiment.
From a more defensive perspective, an awareness of
ESG risks can also be an additional weapon against
the value manager’s ubiquitous enemy, the “value trap.”
Many companies can appear very cheap and havesolid long-term upside potential based on traditional
financial factor analysis. However, by including
analysis of nonfinancial ESG factors, it can become
clear that some of these companies are cheap forgood reason. That said, it is not always appropriate
to assume the worst. Sometimes it can simply be amatter of disclosure, with company management
not really understanding why ESG factors are ofsuch importance to investors. Encouragingly, we areseeing an increasing appetite for engagement among

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company management teams and a willingness
to understand more about ESG practices. This isunderscored by the growing number of companies
reaching out to us for guidance on disclosure levels.

How do ESG factors influence your investment
decisions?
Our philosophy is to choose stocks that trade ata significant discount to our estimate of intrinsic
value. ESG data represent an important sourceof information to help us accurately estimate thisintrinsic value, even if it has not been factored in by
the market. Identifying change within a company’s
structure amid controversy can also create opportunity.
But understanding how improvement and transition
will work in terms of timing and necessary investment
is key to understanding the impact on profitability.
Ultimately, value investing is about buying mispriced
stocks where we think the potential reward is greaterthan the risks. In analyzing the risk part of that tradeoff, we consider everything that helps us reach themost considered conclusions, and ESG has becomea crucial part of that process.

This is an illustrative example of how ESG factors could be incorporated into the investment process. The views expressed may differ fromthose of other investment professionals at T. Rowe Price.

Areas Where We Have Identified
Improving ESG Profiles
MATERIALS

STEEL

JAPAN

Paper and packaging
companies are
positioning for moresustainable options.

Companies aremaking net zeropledges.

Bank of Japan isleading the way ingreen financing.

EMERGING
MARKETSEUROPEAN CAR
MANUFACTURERS

Underappreciatedvalue in EM companies
with improving ESG
profiles.

European companies
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Why ESG Factors Matterin Asia Credit
How do you think of ESG factors within your investment process?
Our philosophy is that ESG factors are another key input into the decision-making
process—they are not the sole driver of an investment decision, nor are they
considered separately from more traditional financial analysis.
In terms of the Asia credit asset class, we believe that integrating ESG considerations
into a fundamental, bottom-up research framework can help to identify high-quality,
forward-thinking companies—businesses with greater prospects for long-termsustainability and, in turn, improved credit risk profiles. Importantly, the integrationof ESG factors, alongside traditional financial factor analysis, can also help manage
downside credit risks.
While ESG considerations are fast becoming mainstream in Asia, an inevitabledivergence is emerging between countries in terms of promoting ESG awarenessand increasing company disclosure requirements. This reaffirms the importance of arobust, dedicated ESG research platform that can keep pace with new developments.

How important are ESG factors in the Asia credit space?
Although Asia has been a relative laggard in adopting ESG integration or applying
sustainable objectives to investment mandates, the region has been at the forefrontof socially responsible investing (incorporating values into investment mandates)with regard to Islamic finance. Malaysia, for example, established a law in 1983
to regulate banking compliant with Islamic tradition, while Indonesia, which boasts
the world’s largest Islamic population, is also one of the world’s leading issuers ofthese types of socially responsible investments.
The issuance of ESG-labeled bonds in Asia ex-Japan totaled USD$75 billion in
2021, trebling the issuance volumes in 2020. China and South Korea combined
account for 70% of the total, while Hong Kong and countries like India andIndonesia split the rest.1

ESG-Labeled Bond
Issuance in Asia ex-JapanSHELDON CHAN

Portfolio Manager,
Asia Credit

While ESG
considerations
are fast becoming
mainstream in
Asia, an inevitabledivergence isemerging [within
the region]...

USD

$75bn
2021

USD

$23bn
2020

1

As of December 31, 2021.
Source: BNP Paribas and Bloomberg Finance L.P. Data analysis by T. Rowe Price. Sustainable issuance is defined as the combined total ofgreen bond and social and sustainability bond issuance.
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Improving ESG
Disclosure Trends
in Asia
ESG disclosure requirements
mandatory for publicly listedcompanies: Hong Kong,
Singapore, Thailand, and
the Philippines

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South
Korea
China

India

Updated voluntary
recommendations to enhance
ESG reporting: India andSouth Korea
New ESG risks disclosure
requirements for listed companies
and bond issuers: China

What are the ESG trends to watch within
Asia credit?
We anticipate that sustainable credit issuance
will continue to increase rapidly in Asia as ESG
considerations become an ever-greater priority for
asset managers and owners alike. From an investment
perspective, however, there are still plenty of growing
pains to push through, creating opportunities forstrategic investors to capitalize on potential pricedislocations.
Asian credit issuers have also tended to screen
poorly in terms of ESG disclosure, making it moredifficult to form a comprehensive picture of theirpotential liabilities and any steps they might be taking
to overcome them. However, there is evidence ofimprovement. ESG disclosure requirements are now
mandatory for publicly listed companies in Hong
Kong, Singapore, Thailand, and the Philippines. The
China Securities Regulatory Commission recently
introduced new requirements mandating all listedcompanies and bond issuers to disclose ESG
risks associated with their operations. Elsewhere,
India and South Korea have updated voluntary
recommendations to enhance ESG reporting.

Hong
Kong
ThailandThe
Philippines

Singapore

Further ESG disclosure requirements are also
expected to emerge amid growing pressure on mostcountries across the region to shrink their carbon
footprints and curb the use of fossil fuels. China,
for example, by far the world’s largest emitter ofgreenhouse gases, has pledged to peak its carbon
emissions by 2030 and achieve carbon neutrality
by 2060. The trend toward increased engagementby companies in Asia, with many looking to better
understand and improve their level of disclosure, is aclear step in the right direction.
We also expect that Asia’s increasing push towardsustainability and reducing its reliance on fossil
fuels could provide a structural tailwind for higher
sustainability issuance. Currently, the investment
universe is skewed toward capital- and commodityintensive industries. Areas like the technology andconsumer sectors make up a far smaller weighting
when compared with the regional equity market where
they represent more than a third of the benchmark
combined. In our view, this is set to change and should
create opportunities across a broader credit opportunity
set through fundamental, bottom-up research.

This is an illustrative example of how ESG factors could be incorporated into the investment process. The views expressed may differ fromthose of other investment professionals at T. Rowe Price.
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FO C U S T H E M E S

Understanding ESG Ratings
The rapid growth of ESG and sustainable investinghas meant that ESG data providers have gone frombeing somewhat of a cottage industry to becoming
big business. As a result, a plethora of ESG ratings
have emerged, designed to help evaluate, rate, andcompare company performance across ESG criteria.
While these ratings have gained strong traction in themarketplace, it is not unusual to find that the mechanicsof these ratings are not well understood by participants
across the market.

ESG Ratings have Low Correlations
An important constraint to consider is that there islittle correlation between the ratings generated by thevarious providers. Numerous academic studies havebeen conducted on the topic, including prominent
work by the MIT Sloan School of Management’s longstanding project that evaluates ESG ratings—known as
the Aggregate Confusion Project. The work, conductedby Berg, Koelbel, and Rigobon,1 reflects the problems
that arise when a nascent and underdeveloped dataset
suddenly gains mass adoption.
The study evaluated the ratings of six ESG data
vendors—Sustainalytics, RobecoSAM (now owned
by S&P), Vigeo Eiris (now owned by Moody’s),
Asset4, KLD, and MSCI. It found that correlations2
between ESG ratings were just 0.54 on average andranged from 0.38 to 0.71. Within the environment,social, and governance categories, environment
ratings averaged a correlation of 0.53, social 0.42,
and governance 0.30. Such low correlations meanthat ratings of any given security can vary markedly
between vendors and therefore warrant close
scrutiny when used as part of investment researchand decision-making.

1
2

Divergence at the Margins—
Identifying Leaders and Laggards
Many asset managers look to construct portfolios thateither include ESG leaders or exclude ESG laggards.
The MIT study illustrated how using different ratings
for security inclusion or exclusion decisions could yield
markedly different outcomes.
Based on the 2014 ratings of the six providers in the
study, the universe of companies covered equatedto a quintile consisting of 184 companies. Just 15
companies made it into the top 20% of all six ratings
providers, and only 23 companies made it into thebottom 20%. Given that correlations between ratings
were only 0.54 on average, we knew that divergence
between ratings was substantial. However, MIT’s
analysis showed that the divergence in ratings waseven stronger for firms ranked within the top quintileof each ratings provider.
To determine the reason for this divergence, the study
broke down the three main components of ESG ratings:§ Scope (range of measurements included),§ Measurement (technique), and§ Weight (proportion applied to each factor).
It found that measurement was the main driver ofdivergence, closely followed by scope. The study
found that weight divergence was the least significantof the three, which is not a surprise given the welldeveloped concept of materiality in ESG analysis.

Massachusetts Institute of Technology Sloan School of Management 2019
Correlation measures how one asset class, style, or individual group may be related to another. A perfect positive correlation means that thecorrelation coefficient is exactly 1. This implies that as one security moves, either up or down, the other security moves in lockstep, in the same
direction. A perfect negative correlation (-1) means that two assets move in opposite directions, while a zero correlation implies no relationship at all.
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Accounting for Ratings Divergence
As a user of ESG data and ratings, we find these results to be completely intuitive. It reinforces
the notion that RIIM provides an ESG profile for a security and is designed as a research tool
to aid fundamental analysis (rather than being the only ESG analysis conducted). It also
underlines the importance of having our own ESG views.
There are several reasons for variations between ESG ratings. Some should start to conformover time, while others will likely remain structurally different.

MATERIALITY LENS
The first step in establishing an ESG framework is to determine the ESG topics therater believes are relevant to financial performance. In some sectors we see muchgreater alignment among raters in determining what is material, while it varies in others.
TYPES OF DATA INPUTSThe next step is determining the data inputs that can provide the right insights on
the ESG topics the rater has deemed material. There are many types of ESG data
points—preparedness, performance, targets, and controversies. Different results
will arise depending on whether a rater decides to find insights on a specific ESG
topic through the types of programs or policies a company has in place versus theirtargets, performance, or track record.
MEASUREMENT/COLLECTION OF DATA INPUTS
The absence of ubiquitous and standardized ESG disclosure means that many raters
depend on using preparedness indicators. The way the same policy or program iscollected through raters’ artificial intelligence (AI) tools and then graded internally
may vary substantially. Differences also exist in the thoroughness and frequency ofdata collection (i.e., one rater’s AI tool may have done a better job of capturing data
points from a company’s sustainability report, or perhaps they have more recently
updated their assessment of a company).
RATING CONSTRUCTION
Some ratings providers have absolute ratings, while others are more strongly biased
toward a sector-relative approach.

RATING OBJECTIVE
While all the major ESG ratings have an objective of financial materiality, there can beassumptions about financial materiality that sway into the objective-setting territory.
For example, a ratings provider could have a view of financial materiality with anunderlying premise that the world is transitioning to a more sustainable economy.

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The Road to Net ZeroAs the world looks to tackle climate change, we areseeing net zero targets emanating from many different
types of entities, including federal and regional
governments, corporations, and universities, as well as
investors. Net zero means achieving a balance between
the greenhouse gases put into the atmosphere andthose taken out. This state is also referred to as carbon
neutral. The focus on net zero targets accelerated in
2021 and was one of the key objectives of COP26.
Coming out of the summit, more than 140 countries
accounting for 90% of global greenhouse gas
emissions had established net zero targets.1
The fact that so many countries have made thiscommitment makes energy transition an importantfactor from a fiduciary responsibility perspective. The
net zero emissions reduction trajectory is a severe one—it requires a 50% reduction in GHG emissions between
2020 and 2030 and reaching net zero by 2050. It is
incomparable to any energy transition that has evertaken place in modern history. Even if governments only
partially achieve their goals, it will be highly disruptive
to industry and macroeconomic trends.
Looking at the enormity of the task at hand, many
want to do their part to aid energy transition. At
T. Rowe Price, we see this in demand for productsthat invest in companies that finance climate solutions,commit to GHG reduction targets, or both. To this end,
we have joined the Net Zero Asset Managers initiative
and are committed to developing investment productswith net zero objectives to help meet the needs ofthese clients.

Politics: What’s Happened,
and What to Expect
The COP26 summit held in Glasgow last November
was driven by climate urgency. The impact of climatechange has become much more real to politicians asmajor storms and other weather events are becoming
more prominent. Whether or not the summit was
successful is in the eye of the beholder. Technically,
success should have been gaining agreement for allparties to limit global warming to 1.5°C, backed up
with nationally determined contributions (NDCs)—plans
submitted by each nation that detail how they will
deliver on GHG reductions. That did not happen as theaggregate NDCs fell well short of net zero 2050, but,given the enormity and difficulty of the task at hand, thatwas probably not a realistic expectation for COP26.
While politicians may have done well for the hand they
were dealt, COP26 can only be viewed as a failure
through the lens of climate change math. A range of
estimates have come out regarding the commitments
made at Glasgow, which imply a warming scenario
of at least 1.8°C–2.1°C at the end of the century. The
1.8°C estimate comes from the International Energy
Agency (IEA) and has been criticized for making someheroic assumptions.2 The 2.1°C estimate assumes full
implementation of the NDC targets and has a heavy
reliance on strong progress being made between
2030 and 2050. More realistically, the Climate Action
Tracker highlights that the 2030 targets are notambitious enough and would put us on course for
2.4°C of warming.
As part of the Glasgow agreement, countries will
resubmit their NDCs ahead of COP27 and havespecifically been asked to improve their 2030 targets.
A key takeaway from the talks is an acceptance thatcountries will meet more frequently to review theirtargets and measure progress against them.
Another giant gap in the equation for investors
is corporate disclosure of GHG emissions data,something we also discussed in last year’s ESG
Annual Report. Data availability has continued to
improve from a year ago in that more companies arechoosing to report, but a lack of standardization is still
an issue (which means when two companies reporttheir GHG emissions, the comparison may not beapples to apples). Regulators are starting to address
the issue, but reporting GHG emissions is still not
mandatory in most places.

Source: The Climate Action Tracker—an independent scientific analysis that tracks government climate action and measures it against the
globally agreed Paris Agreement aim of “holding warming well below 2°C, and pursuing efforts to limit warming to 1.5°C.”
2
The International Energy Agency. As of November 4, 2021
1

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Will Mandatory Climate Reporting Become the Norm?
Governments are moving toward compulsory climate reporting, but more progress is needed.

EuropeThe European Union

Sustainable Finance
Disclosure Regulation(SFDR) to becomplemented by the
Corporate Sustainability
Reporting Directivein January 2023.

Switzerland

Federal Council plans
to introduce mandatory
climate reporting andis preparing a draft
consultation due in
Summer 2022.

United Kingdom

North America
United States

The Securities andExchange Commission
has proposed that USlisted companies will
have to disclose climaterelated data based on
TCFD requirements

CanadaLatin America
BrazilBrazil’s central bankoutlined new rules forbanks to incorporate
climate change-relatedrisks in their stress tests
from July 2022.

MexicoThe Banco de México
The Canadian Securities
has recommended
Administrators released
the development ofa proposal to require alla regulatory strategy
companies that issue debt that follows TCFD
or equity to the public torecommendations.
disclose climate-related
information.

From April 2022, 1,300 of
the largest UK registeredcompanies and financial
institutions must makeclimate related disclosurein line with the TCFD
requirements.

Asia-Pacific
China

In 2021, the central
bank announced plans
to introduce mandatory
disclosure of climaterelated information.

Japan

Council of Experts
proposed enhancing
climate-related disclosure
based on the TCFD
framework for prime
market listed companies.

AfricaSouth Africa

The National Treasury
recommended standards
for ESG and climate
risk monitoring andreporting at portfolio andtransaction level. The
Johannesburg Stock
Exchange has issued draft
guidance, based on the
TCFDs.

New Zealand

Using the TCFD
framework, certain large
financial institutions must
make climate-related
disclosures from 2022.

Singapore

Singapore Exchange
Regulation’s roadmap
for climate-related
disclosures will bemandatory from 2023.

Hong Kong

Source: S&P Global Sustainable; Allen & Overy; Norton
Rose Fulbright; Sustainable Stock Exchange Initiative;
Analysis by T. Rowe Price as of March 31, 2022

Hong Kong’s Green andSustainable Finance
Cross-Agency SteeringGroup plans to makeTCFD-aligned disclosuresmandatory by 2025.
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Evaluating Climate in Investments
With more than 140 countries (accounting for 90% of
global greenhouse gas emissions) having establishednet zero targets, understanding how our investments
are positioned in this changing landscape is essential
to fulfilling our role as an asset manager. Similarly,
many of our clients recognize this potential investment
risk and want to understand how their portfolios are
positioned regarding the energy transition.

To this end, we generate quarterly greenhouse gas
footprint profiles for a range of investment portfolios
we manage, where enough data are available.

Global Commitments to Greenhouse
Gas Reductions
Current aggregate Nationally Determined Contributions(NDCs) fall short of what is needed to reach net zero by 2050.

83

COUNTRIES(representing
74.2% ofglobal GHG
emissions) havecommunicateda net-zerotarget157
COUNTRIES(representing 83.2% of global
emissions) have submitted a
new or updated Nationally
Determined Contributions

Of these,

93
COUNTRIES(representing 65.3% of global emissions)have increased their emissions reduction
targets compared to their previous
Nationally Determined Contributions

Source: Climate Watch. 2020. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org. World Bank.
2017. Nationally Determined Contributions (NDCs). Available at: http://spappssecext.worldbank.org/sites/indc/Pages/INDCHome.aspx.
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2021
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Foreword

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesOf course, isolating climate into a single factor like
GHG footprint can be misleading—it would be akin tofinancial analysis only taking the income statement
into account and ignoring valuable insights fromthe balance sheet and cash flow statement. A GHG
footprint gives you a “point in time” analysis andmisses key items such as the historical and forward
trajectory of emissions and exposure to climate
solutions. More importantly, a myopic view on GHG
footprints could lead an investor to only invest in
low emitters, thereby ignoring the prospect of GHG
reductions in the real economy.

In recognition that net zerois a complex topic that cannot
be boiled down to a single
data point, we are committed
to expanding transparency
around climate reporting.
In recognition that net zero is a complex topic thatcannot be boiled down to a single data point, weare committed to expanding transparency aroundclimate reporting. Due to data availability and otherlimitations, this will take time—but we are committed
to continued progress.

Corporate
Engagement

Proxy Voting

Collaborations

Resources

Investment Products Targeting
Net ZeroSome clients want to go further than considering
energy transition as an investment risk by specificallytargeting GHG reduction as an investment goal. A
good example is the Net Zero Asset Owner Alliance.
The UN-convened alliance includes 71 asset
owners controlling more than USD 10 trillion that arecommitted to transitioning investment portfolios to
net zero greenhouse gas emissions by 2050.
We have been working with clients that are membersof the Net Zero Asset Owner Alliance as well as otherclients looking to set GHG reduction targets on theirportfolios. This is something that can be more easily
accomplished when the client (typically institutional)
has set up their own separate account. Committing toa specific GHG reduction target limits the investment
universe and by default prioritizes an environmental
target over financial performance—not every client inan existing pooled asset would want this to take place.
Nevertheless, we recognize that there are many clients
who wish to apply net zero targets to their investment
portfolios, but for various reasons need to rely onpooled investment vehicles. For this reason, we are
seeking to develop investment products with net zero
objectives to meet their needs.
Ultimately, by signing up to the Net Zero Asset Managers
initiative we are illustrating our commitment to developing
products with net zero objectives. It also underlines
our intention to help promote best practices andcreate industry standards around net zero portfolios.

THE NET ZERO ASSET MANAGERS INITIATIVE
As of April 25, 2022, T. Rowe Price has become a signatory of the Net Zero Asset Managers initiative (NZAMI).
NZAMI is an international group of asset managers committed to supporting the goal of net zero greenhousegas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C. It launched in December
2020 as a sibling organization to the Net Zero Asset Owners Alliance, with the aim of galvanizing the asset
management industry to provide products suitable for asset owners committing to net zero goals.
NZAMI has grown to include 236 signatories with USD 57.5 trillion assets under management (as ofDecember 31, 2021).1

1

Source: netzeroassetmanagers.org| 39

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Corporate Political Involvement
The Need for Deeper Engagement

Evaluating and Mitigating Risk

In 2021, we increased our engagement with issuerson the topic of corporate political involvement. Ourdecision to explore this issue more deeply arose from
two issues:

Involvement in the political process can be appropriate
and beneficial for investors in markets where theactivity is permitted and where the company takes aprincipled, business-focused approach to its politicalactivities. However, there is no question that suchparticipation also opens the potential for significant
misuse, conflicts of interest, inappropriate use of
corporate funds, and furthering the interests of thecorporation ahead of those of its stakeholders.

First, a small number of companies held in our portfolios
experienced significant value depreciation due tocorruption charges stemming from political activity.
Second, we became concerned about inconsistencies
observed between some issuers’ stated ESG
objectives and the lobbying being conducted on theirbehalf by trade associations.

Better Risk Mitigation
OVERSIGHT

Corporate political activity is a complex topic. The
regulations around corporate political giving anddisclosure of such donations vary widely acrossgeographies. Also, the activity itself takes manydifferent forms. For example:

The Board of Directors actively
monitors for consistency between
corporate values and those espousedby the elected representative or
lobbying organization.

§ Direct donations to candidates, such as throughpolitical action committees

TRANSPARENCY§ Memberships in trade organizations that conduct
lobbying§ Public statements on social issues by company
leadership§ Participation in public comment periods regarding
new legislation§ Influencing public perception of societal issues
through media channels or issue-oriented think tanks
Our engagement on this subject has been primarily
in the U.S. and Australian markets, where the investor
community has been most active in seeking reform or
improved alignment of corporate political involvementand ESG commitments.
We continue our work on the topic of corporate politicalinvolvement. We are currently building a tool that we
believe will enable us to more easily identify situations
where corporate messaging on a range of ESG issues
conflicts with the company’s lobbying priorities.

Beyond the legal reporting
requirements, the company discloses
its policies for political participationand its memberships in significant
trade associations.
COMMUNICATION
A company’s public affairs andsustainability teams communicate
their priorities and commitments toavoid conflicting objectives.
ADVOCACY
When there is a gap between thecompany’s values and those of its
trade association, there should bean escalation plan.

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CLIMATE RISK AND CORPORATE LOBBYING
In relation to climate-related risk specifically, some situations
require tailored approaches.
There is an imbalance in corporate lobbying on potential climatechange regulation. While many companies are committing to
net zero emissions targets for their own businesses, they do
not collectively advocate for governments to adopt restrictions,tax incentives, or other mechanisms to enable economies tode-carbonize on a realistic timetable. However, there are
multiple influential business associations that advocate strongly
for the interests of fossil fuel producers and other highemissions industries.
Engagement Approach
When we find companies that describe climate change as aserious risk to their business yet are also members of tradeassociations known to resist legislative solutions to the problem,
we ask how they prioritize these competing objectives. We
also inquire about their efforts to escalate the conflict within the
trade organization and, if they deem it unresolvable, whether
they might elect to leave the association.

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InvestingApproach

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ResourcesC O R P O R AT E E N G AG E M E N T

2021 Engagement Activity
At T. Rowe Price, we are fortunate to manage
USD 1.687 trillion1 of assets for our clients, predominantly in actively managed portfolios. We believe thescale and scope of our business puts us in a powerful
position compared with many of our peers when we
carry out our ESG engagements with companies.
The sheer size of our assets under management has
clout. Simply put, it gives us better access to company
management.
Our active investment approach also affords us real
influence. In most cases, if we see an impediment toreaching our investment goals, such as a company’s
poor business practices or disclosure, we have theoption not to invest. This contrasts with managers ofpassive portfolios, who typically have no choice but tohold an investment despite any evidence of businesspractice or disclosure concerns.

Engagements by Category
Governance5

Throughout the course of 2021, we engaged withcompanies on 788 separate occasions, sometimes
more than once with the same company.

ENVIRONMENT
1. Greenhouse gas emissions
2. Disclosure of environmental data
3. Product sustainability
4. Environmental management
5. Renewable energy

%

23

%

While we engage with companies in a variety ofinvestment contexts, ESG engagement focuses onlearning about, influencing, or exchanging perspectives
on the environmental practices, corporate governance,or social issues affecting their businesses.

Top 5 Engagement Topics by Category
Environment

6

Our investment-driven engagement program frequently
identifies targets through our proprietary RIIM analysis,
governance screening, and analysts’ fundamental
research. ESG engagement meetings are carried out
by portfolio managers and analysts from our equity and
fixed income teams as well as by our ESG specialists.

788
Engagements
21 %SOCIAL

Social

1. Disclosure of social data
2. Employee safety and treatment
3. Diversity, equity, and inclusion
4. Lobbying activities related to social
matters
5. Supply chain

GOVERNANCE
1. Executive compensation
2. Board composition
3. ESG accountability
4. Board diversity
5. Disclosure of governance data

1

As of December 31, 2021. Firmwide AUM includes assets managed by T. Rowe Price Associates, Inc., and its investment advisory affiliates.
The acquisition of Oak Hill Advisors (OHA) completed on December 29, 2021, included $46.9 billion of fee-based AUM, which are reflected in
the firm’s AUM at December 31, 2021.
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Engagement Classifications in Numbers
By Market Capitalization

PrivateCompanies (18)

USD 2 bn

USD 2–10 bn

USD 10–50 bn

USD 50+ bn

89

206

290

185

By Region
Americas

EMEA

Asia Pacific

435

226

127

Number of ESG Engagements by Sector 2021
By Sector

Industrials

Financials

Consumer
Discretionary

Health Care

119

118

114

106

Consumer
StaplesReal
EstateInformation
Technology

Materials

80

53

68

Communication
Services

Energy Utilities

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P ROX Y VOT I N G

2021 Proxy Voting Activity
Highlights

61,1183

Proposals Voted

Regions76

19.2%

Countries

APAC

26.9%
EMEA

We voted on 61,118 proposals in 2021. Some categories,
such as the election of directors, are universal acrossthe markets where we invest. Other voting issues are
unique to select regions. The data in the tables on page
45 highlight the top five most common voting issues ineach category, including the number of proposals wevoted on and the percentage of those that we voted withmanagement.

Approach
Proxy voting is a crucial link in the chain of stewardship
responsibilities that we execute on behalf of ourclients. We vote our clients’ shares in a thoughtful,
investment-centered way, considering both high-level
principles of corporate governance and companyspecific circumstances. Decisions are inclusive,
involving our ESG specialists and the investment
professionals who follow the companies closely. Our
overarching objective is to cast votes in support ofthe path most likely to foster long-term, sustainablesuccess for the company and its investors.
T. Rowe Price portfolio managers are ultimately
responsible for the voting decisions within thestrategies they manage.

53.9

%

Americas

They receive recommendations and support froma range of internal and external resources:§ The T. Rowe Price ESG Committee§ Our global industry analysts§ Our specialists in corporate governance andresponsible investing§ Institutional Shareholder Services (ISS), our external
proxy advisory firm
Our proxy voting program serves as one element of ouroverall relationship with corporate issuers. We use
our voting power in a way that complements the otheraspects of our relationship with these companies,
including engagement, investment diligence, andinvestment decision-making.

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Americas | 32,944 Management and Shareholder Proposals# ofProposals% WithMgmt.

Shareholder Proposals# ofProposals% WithMgmt.

Elect Directors (Uncontested)

22,40289.9%

Social, Political, or
Environmental Matters

185

68.1%

Management Compensation:
Say on Pay and Equity Plans

4,008

84.3%

Adopt or Amend Shareholder
Rights

169

82.2%

Appoint Auditors/Approve
Auditor Fees

3,399

99.2%

Related to Director Policies

103

68.0%

Routine Business andOperational Matters

1,076

70.5%

Related to Compensation
Policies

28

82.1%

Capital Structure Items

740

75.7%

Related to Routine Businessand Operational Matters

26

88.5%

Other

763

70.1%

Other

45

60.0%

Total

32,388

Total

556

Management Proposals

APAC | 11,747 Management and Shareholder Proposals# ofProposals% WithMgmt.

Shareholder Proposals# ofProposals% WithMgmt.

Elect Directors (Uncontested)

6,378

93.0%

62

91.9%

Routine Business andOperational Matters

Social, Political, or
Environmental Matters

1,581

89.8%

Related to Routine Businessand Operational Matters

56

85.7%

Capital Structure Items

1,474

92.3%

Related to Auditors

29

100.0%

Management Compensation:
Say on Pay and Equity Plans

1,153

84.0%

Related to Compensation
Policies

17

76.5%

Mergers and Acquisitions

482

88.4%

Capital Structure Items

7

100.0%

Other

500

98.0%

Other

8

62.5%

Total

11,568Total

179

Management Proposals

EMEA | 16,427 Management and Shareholder Proposals# ofProposals% WithMgmt.

Shareholder Proposals# ofProposals% WithMgmt.

Elect Directors (Uncontested)

5,770

93.9%

Related to Routine Businessand Operational Matters

59

88.1%

Routine Business andOperational Matters

3,883

96.1%

Related to Auditors

34

100.0%

Management Compensation:
Say on Pay and Equity Plans

2,746

86.7%

Social, Political, or
Environmental Matters

30

63.3%

Capital Structure Items

2,656

96.4%

Related to Director Policies

23

100.0%

Appoint Auditors/Approve
Auditor Fees

832

97.7%

Related to Compensation
Policies

4100.0%

Other

390

94.6%

Other

-

N/A

Total

16,277

Total

150

Management Proposals

As of December 31, 2021.
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Shareholder Proposals in Focus
In 2021, the T. Rowe Price portfolios voted on 1,098 shareholder resolutions across all
markets. Of those, 403 were situations where shareholders were nominating directors to
a company’s board. Another 372 were resolutions asking companies to adopt a specificcorporate governance practice, and 323 were social and environmental resolutions.

Climate Resolutions Prominent

Say on Climate

Climate-related shareholder resolutions were again
prominent in 2021, particularly within high-impact
industries, such as the energy, industrials, andfinancials sectors. The intensifying focus on climate,alongside new regulatory and industry initiatives, areworking to compel greater levels of transparency
from asset managers about their voting rationales.
The most common resolutions filed in 2021 were
those requiring companies to set targets to reducegreenhouse gas (GHG) emissions and to report on
climate-related lobbying. Other climate-related topics
addressed by these resolutions included subjects like
waste management (e.g., plastic waste disposal andrecycling initiatives) or proposals linked to deforestation.

In 2021, we saw a marked increase in “say on climate”
votes, where a company asks its shareholders toapprove its climate strategy or transition plan via anonbinding vote.

Two prominent themes forclimate-related proposals
were those requiring
companies to set targets
to reduce greenhouse gas
emissions and to reporton climate-related lobbying.
In addition to shareholder resolutions, the 2021 annual
general meeting (AGM) season featured a number of“vote no” campaigns instigated at various U.S. utility
and energy companies, where shareholders wereencouraged to vote against directors at companies
seen as laggards on climate issues. None of theseultimately proved successful and gained little support
across the board.

Under these proposals, companies are asked toprovide (i) annual disclosure of emissions and a plan
to manage those emissions and (ii) an annual advisory
vote on the plan and performance relative to the plan.
In practice, we have seen a range of implementation
approaches. Some have proposed a triennial vote on
the climate strategy instead of an annual vote on thereporting; other companies have offered both. Somecompanies adopted a “one and done” approach, whileothers are offering an ongoing commitment to holding
a shareholder vote.
In some instances, the company has already agreed
to undertake the say‑on‑climate exercise, so the votetakes the form of a management‑sponsored proposal,
with a board recommendation of “for.” In otherinstances, the company has not agreed to implement
say on climate, so the vote takes the form of a shareholder resolution. Say-on-climate proposals tended tofind greater support in Europe than in North America.

Variable Quality of Resolutions
A wide range in the quality of shareholder proposals
was again evident in 2021, particularly where theparameters allowing resolutions are less demanding.
Resolutions filed by individual investors tend to belower quality (less substantive, poorly targeted, oraddress issues that are not material), while those
filed by large, institutional investors are usually more
substantive and typically warrant more detailed
consideration. The quality of the resolutions is often
reflected in the overall regional support secured.

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Resources2021 Shareholder Resolutions by Topic
Number of shareholder resolutions we voted on in 2021 by proposal topic. For “Socialand Environmental Resolutions” we classify the proposals into five separate categories.

Corporate
Governance
Resolutions

Shareholders
Nominating
Directors

372

403

Foreword

Total
1,098

Social andEnvironmental
Resolutions

323

SocialEnvironmental

Political Spendingand Lobbying

Anti-nuclear
Power

Anti-ESG

Resolutions

134

89

54

37

9

Supported

20%

34%

32%

-

-

Opposed

79%

50%

68%

100%

100%

Abstained

-

7%

-

-

-

Elected not
to vote due toshare blocking*

1%

9%

-

-

-

A Thoughtful, Investment-Focused Framework
The quality, intent, and utility of shareholder resolutions
on ESG matters are highly variable. Some well‑targeted
resolutions are extremely helpful in persuading
companies to strengthen their management of certain
risks, leading to improved outcomes for investors.
Other resolutions are not helpful—we would evencall them harmful—if the objectives of the proponent
do not align with economically oriented, long‑term
investors. This is why we believe that the most
responsible approach to voting such resolutions is to
apply a thoughtful, investment‑focused framework.

*Share blocking is a requirement in certain markets that impose liquidity constraints in order to exercise voting rights. We generally do not votein these markets.
As of December 31, 2021.
Source: T. Rowe Price.
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C O L L A B O R AT I O N S

Collaborative Engagement
Industry collaboration can be a means of escalating a concern we haveidentified in an individual dialogue. The framework we use to determine
participation in a collaborative engagement is illustrated below.

Five Key Considerations for Collaborative Engagement
ALIGNMENTHow closely aligned
is this engagement
opportunity with ourinvestment holdings?
Does it include
companies where
we are significant
shareholders?

IMPACTPOTENTIALRESOURCE
FOCUS

Would ourparticipation help
the engagement
initiative? Does itneed a large asset
manager merely togain attention, or
does it already havebroad support?

Does theengagement
make the mostefficient use of ourinternally dedicatedengagement
resources?

PRACTICALITYTANGIBILITY

Have we alreadyundertaken the sameengagement or very
similar engagements
unilaterally withsuccess?

Is the scope ofthe collaborative
engagement clear,
and are we confident
that it will not changeover time?

Collaboration Highlights
In 2021, we joined the International Corporate
Governance Network to strengthen our access togovernance policy expertise in the international markets
and the UK chapter of the 30% Club Investor Group tostrengthen our work on diversity, equity, and inclusion.
We began supporting the Sustainability AccountingStandards Board (SASB) Alliance for improved
ESG disclosure. We also initiated alignment with
the Access to Medicine Index to aid us to holdpharmaceutical companies to account for equitable
access to health care.
We joined the Global Impact Investing Network (GIIN)
to support the launch of our new impact strategies
and help develop our knowledge of market practicein this field.
Together with other members of Associacão Investidoresno Mercado de Capitais (AMEC), in December 2021
we co-signed a letter to the president of the B3, theBrazilian stock exchange, and the chairman of the
Securities and Exchange Commission of Brazil (CVM).
The letter highlighted the increase in technical proxyvoting difficulties experienced by foreign investors

wishing to vote in the Brazilian market, and it offeredspecific suggestions for improvement.
In 2021 we increased both the number and the rangeof collaborative investor initiatives through which weundertook company engagements. For the first time,
T. Rowe Price led a collaborative engagement, and
we also began a formalized thematic engagement
program. As part of the Asian Corporate Governance
Association, we led a collaborative dialogue on
governance and sustainability topics with a Japanesecompany and participated in another.
As part of a collaborative engagement with 17 othermembers of Farm Animal Investment Risk & Return(FAIRR), we issued letters to global food companies
asking them to diversify their protein sources. The
letters were tailored to each company’s level ofprogress but generally encouraged better disclosure
and practices related to sustainable proteins and therelated supply chains.
Our head of corporate governance was elected chairof the Investor Stewardship Group in June 2021.

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T. Rowe Price Has Joined or Led the Following Initiatives1

1

JoinedOrganization

Description

Council of Institutional Investors (CII)

U.S. association of institutional investors, corporate issuers, and asset managers

1989

Principles for Responsible
Investment (PRI)

Global initiative for responsible investment

2010

UK Stewardship CodePublic commitment to uphold stewardship principles for UK investors

2010

Japan Stewardship CodePublic commitment to uphold stewardship principles for Japanese investors

2014

Associacão Investidores no
Mercado de Capitais (AMEC)

Association for minority investors in Brazil

2015

Asia Corporate Governance
Association

Pan-Asian association for institutional investors

2016

UK Investor Forum

Collaborative engagement association for investors in UK companies (founding member)

2016

International Capital Markets
Association (ICMA)

Aims to promote resilient well-functioning international and globally coherent cross-border debt
securities markets, which are essential to fund sustainable economic growth and development

2017

Investor Stewardship Group (ISG)

Investors advocating for core governance principles for U.S. market participants (founding
member)2017

Japan Stewardship Initiative

Investor forum for stewardship solutions and sharing of best practices (founding member)

2019

Investment Association Climate
Change Working Group

Group to direct the work of the UK investment management industry trade body in relation toclimate change

2020

Institutional Investors Group on
Climate Change (IIGCC)

European membership body for investor collaboration on climate change

2020

Emerging Markets Investors
Alliance

Organization that facilitates investor advocacy to improve policies and practices ofgovernments and companies in the emerging markets

2020

Task Force on Climate-Related
Financial Disclosures (TCFD)

The Financial Stability Board created the TCFD to improve and increase reporting of climaterelated financial information

2020

Responsible Investment
Association Australasia (RIAA)Champions responsible investing and a sustainable financial system in Australia and New
Zealand2020

Farm Animal Investment Risk &Return (FAIRR)

A collaborative investor network that raises awareness of the ESG risks and opportunities
caused by intensive animal production

2020

PLSA Stewardship Advisory Group

Investor-led group providing practitioner insight on stewardship topics

2020

Access to Medicine Index

A tool for driving change in the pharmaceutical industry through the identification of bestpractices, tracking progress, and highlighting where critical action is needed to improve accessto medicine for vulnerable populations

2021

TCFD Consortium (Japan)

Supports the TCFD in Japan by furthering the discussion on good practice related to climatelinked disclosures and endorsing better-informed investment decisions

2021

Global Impact Investing Network(GIIN)

Organization dedicated to increasing the scale and effectiveness of impact investing aroundthe world

2021

Sustainability AccountingStandards Board (SASB) Alliance

Program designed for asset managers, asset owners, companies, and service providers tolearn about the financial impact of ESG issues. It allows members to explore best practices tointegrate material sustainability information into existing processes

2021

UN Global Compact

The world’s largest corporate sustainability initiative. Its strategy drives business awarenessand action in support of achieving the UN Sustainable Development Goals by 2030

2021

Investment Management Education
Alliance (IMEA)ESG Committee

A forum exclusively for investment management firms to discuss multiple aspects of ESG
investment and education

2021

30% Club Investor Group–UK
Chapter

Global campaign led by chairs and CEOs taking action to increase gender diversity at board
and executive committee levels

2021International Corporate GovernanceNetwork (ICGN)

Investor-led initiative to provide highest standards of corporate governance and stewardshipworldwide

2021

Net Zero Asset Managers initiative

International group of asset managers committed to supporting investing aligned with net zero
emissions by 2050 or sooner

2022

ICMA Principles

Principles include Green Bond Principles, Social Bond Principles, Sustainability Bond
Guidelines and Sustainability-Linked Bond Principles

2022

As of April 2022. At least one T. Rowe Price Entity is a member of the above organizations.
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ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

R E S O U RC E S

ESG Investment Resources*
Responsible Investing

MARIA ELENADREWSUHA READ1IONARICHARDSONDANIEL RYAN

Director of
Research,
Responsible
Investing (London)

Associate Analyst(Hong Kong)

General Manager(London)

Associate Analyst(London)JOE BALDWIN

DYLAN COTTERASHLEY HOGAN

Associate Analyst(London)

Associate Analyst(Baltimore)

DUNCAN SCOTTKAOUTAR YAICHE

Associate Analyst(London)Analyst (Baltimore) Senior Business
Analyst (Baltimore)

RYAN CHIANGKARA MCCOY

Associate Analyst(Baltimore)

NATALIEMCGOWEN

Associate Analyst(Baltimore)

MICHAEL RAY1

Governance Team

DONNA
ANDERSONHead of Corporate
Governance(Baltimore)

JOCELYN BROWN

Head ofGovernance,
EMEA and APAC
(London)Governance
GovernanceAnalyst (Baltimore) Analyst (Baltimore)

Proxy Voting2

Regulatory Research
PROXY VOTINGOPERATIONSTEAMAMANDA FALASCO

Lead Manager(Baltimore)

KATIE DEAL

Washington
Analyst(Baltimore)

MICHAELPINKERTON

Associate Analyst(Baltimore)* As of March 31, 2022. Not pictured - Matthew Lodge, Senior Business Analyst (London).
1
2

Focused on operations and liaison with Distribution.
Part of Investment Operations Group.
| 50

Engagement
Data

2021
in Review

Foreword

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Impact Investing—Global Equity

Impact Investing—Global Credit

HARI BALKRISHNA

MATT LAWTONWILLEM VISSER

ELLEN

FATNA CHELIHIMICHAEL GANSKEBENJI BAXTER

Portfolio Manager(London)

CHRIS VOST

Investment Analyst(London)Portfolio Manager(Baltimore)

Associate Portfolio O’DOHERTYManager (London) Impact Associate
Analyst (London)

Investment Specialists3

VERONIQUE
CHAPPLOW

ESG Investment
Specialist(London)PENNY AVRAAM

ESG Portfolio
Analyst (London)

LAURENCETAYLOR

Senior Portfolio
Portfolio Specialist— Analyst—Impact
Investing, Global
Impact Investing,
Equity (London)
Global Equity(London)Portfolio Specialist—
Impact Investing,Global Credit(London)Portfolio Analyst—
Impact Investing,Global Credit(London)T. Rowe Price Investment
Management, Inc. (TRPIM)4CHRIS
WHITEHOUSEHead of
ESG, TRPIM(Washington, D.C.)

3

KEVIN KLASSENESG Quantitative
Analyst (Baltimore)

MOLLY SHUTT

Associate Analyst,
Responsible
Investing(Washington, D.C.)

BRANDON LEE

Associate Analyst,
Responsible
Investing(Washington, D.C.)

Support with client interaction and communication.
As of March, 7, 2022, the date that T. Rowe Price Associates, Inc. (TRPA) transitioned 6 of our well-established U.S. equity and fixed income
investment strategies to a new, separate, SEC-registered U.S. investment adviser, T. Rowe Price Investment Management (TRPIM).

4

| 51

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

ESG Committee
The ESG Committee is predominantly composed of portfolio managers, including equity and fixed income.
The role of the committee is to oversee the firm’s:§ ESG policies (including proxy voting policy andexclusion policies)§ Implementation of exclusion lists§ Impact investment framework§ Implementation of ESG in investment processes§ Implementation of proxy voting policy

Donna F. Anderson
Cochair, Head of Corporate GovernanceMaria Elena Drew
Cochair, Director of Research, Responsible Investing

Austin Applegate
Portfolio Manager, Municipal Bonds

Matt Lawton
Portfolio Manager, Impact Investing - Global Credit

Kamran Baig
Director of Equity Research, EMEA and Latin America

Yoram Lustig
Head of EMEA Multi‑Asset Solutions

Hari Balkrishna
Portfolio Manager, Impact Investing - Global Equity

Ryan Nolan
Senior Legal Counsel, Legal

Oliver Bell
Associate Head, International Equity

Ken Orchard
Portfolio Manager, Global Fixed Income

R. Scott Berg
Portfolio Manager, Global Growth Equity

Sally Patterson
General Manager, International Equity

Jocelyn Brown
Head of Governance, EMEA and APAC

Thomas Poullaouec
Head of Multi-Asset Solutions, APAC

Archibald Ciganer
Portfolio Manager, Japan Equity

Preeta Ragavan
Equity Investment Analyst

Anna M. Dopkin
Strategic Project Manager

John C.A. Sherman
Equity Investment Analyst

Amanda Falasco
Lead Manager, Proxy Services

Justin Thomson
Head of International Equities and CIO

Divya Gopal
Credit Analyst

Mitchell Todd
Portfolio Manager, UK Equity

Ryan Hedrick
Associate Portfolio Manager, U.S. Large-Cap Equity

Eric Veiel
Head of Global Equity and CIO

Arif Husain
Head of International Fixed Income

Willem Visser
Associate Portfolio Manager, Fixed Income ESG

Michael Lambe
Associate Director of ResearchErnest Yeung
Portfolio Manager, Emerging Markets Discovery Equity| 52

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

4
1
2
1
1
3
3
1
1
4
2
4
4
4
1
1
4
2
4
1
1
2
2
3
2
2
2
2
2
4
4
4
3
2
1
4
4
2
3
4
4
1
2
2
4
1
2
3
3
4
1
4
1
4



E N G AG E M E N T DATA

2021 Engagements
ESG classifications of all company engagements conducted in 2021.
Company Name
3M Co
Abcam PLCABN AMRO Bank NV
ACADIA Pharmaceuticals Inc
Accenture PLC
Adani Ports & Special Economic Zone Ltd
Adaro Energy Tbk PT
Aflac Inc
Afterpay Ltd
AGCO Corp
Agile Group Holdings Ltd
Air Liquide SA
AJ Bell PLC
Alaska Air Group Inc
Albemarle Corp
Alcon Inc
Alexandria Real Estate Equities Inc
Alibaba Group Holding Ltd
Alicorp SAA
Alkermes PLC
Allbirds Inc
Alnylam Pharmaceuticals Inc
Alphabet Inc
ALS Ltd
Amadeus IT Group SA
Amazon.com Inc
Ambev SA
Ambu A/S
Ambuja Cements Ltd
Amcor PLC
Ameren Corp
American Campus Communities Inc
American International Group Inc
American Water Works Co Inc
Amgen Inc
Amorepacific Corp
Amphenol Corp
Analog Devices Inc
Anaplan Inc
Anglo American PLC
Antofagasta PLC
APA Corp
Apartment Income REIT Corp
Apple Inc
Applied Materials Inc

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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 53

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Company Name
Aptiv PLC
Argenx SE
Aristocrat Leisure Ltd
Armstrong World Industries Inc
Array Technologies Inc
Aruhi Corp
Asahi Co Ltd
Asahi Kasei Corp
Ascendis Pharma A/S
Ascential PLC
Ashtead Group PLC
ASML Holding NV
ASOS PLC

Assurant Inc
Astellas Pharma Inc
Astral Ltd
AstraZeneca PLC
Asurion LLC
AT&T Inc
Atlantic Capital Bancshares Inc
Atrion Corp
Auction Technology Group PLC
Australia & New Zealand Banking Group Ltd
AvalonBay Communities Inc
Avantium N.V.
Avery Dennison Corp
Aviva PLC
Axis Capital Holdings Ltd
AZZ Inc
Banco Santander Chile
Bangkok Bank PCLBank Leumi Le-Israel BM
Bank of America Corp
Bank Rakyat Indonesia Persero Tbk PT
BankUnited Inc
Barclays PLC
Barrick Gold Corp
Barry Callebaut AG
Bayer AG
Becton Dickinson and Co
Bharat Forge Ltd
BHP Group Ltd
Bill.com Holdings Inc
Biogen Inc
Black Knight Inc
Bluebird Bio Inc
BNP Paribas SA
Boeing Co/The
boohoo Group PLC
Booking Holdings Inc

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance





2
4
1
4
4
2
2
1
4
2
1
1
2
2
1
2
3
4
4
4
1
3
4
3
4
2
2
4
2
1
1
4
4
2
4
4
3
1
1
2
4
1
1
1
4
2
3
1
3
2
3
2
4
4
3
2
4
2
2
2
2
1
2
4

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

The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 54

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
Booz Allen Hamilton Holding Corp
Boston Beer Co Inc/The
BP PLC
Braskem SA
Bridgepoint Group PLC
Brighthouse Financial Inc
Brink's Co/The

British American Tobacco PLC
Britvic PLC
Brixmor Property Group Inc
Broadcom Inc
Brookfield Renewable Partners LP
Budweiser Brewing Co APAC Ltd
Bunge Ltd
Bunka Shutter Co Ltd
Burberry Group PLC
Cadence Design Systems Inc
Cairn Homes PLC
Camden Property Trust
Capitec Bank Holdings Ltd
Cardinal Health Inc

CareDx Inc
Carnival Corp
Carrefour SA
Casey's General Stores Inc
Casino Guichard Perrachon SA
Caterpillar Inc
Cboe Global Markets Inc
CCR SA
Cedar Realty Trust Inc
Centene Corp

CenterPoint Energy Inc
Ceridian HCM Holding Inc
Challenger Ltd
Chevron Corp
China Mengniu Dairy Co Ltd
China Resources Gas Group Ltd
Chipotle Mexican Grill Inc
Chubb Ltd
Churchill Downs Inc
Cia de Minas Buenaventura SAA
Cie de Saint-Gobain
Cie Financiere Richemont SA
Cigna Corp
Cinemark Holdings Inc
CIRCOR International Inc
Citizens Financial Group Inc
Clarivate PLC
Close Brothers Group PLC
Coles Group Ltd

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

2
4
1
3
4
4
2
2
3
2
3
3
4
1
3
2
1
2
2
3
2
4
1
3
2
1
3
4
2
4
1
3
1
2
4
4
1
1
2
4
4
4
3
2
2
4
4
1
2
4
2
4
2
4
2
1
4
1
4
3
1
2
2
1

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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 55

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Company Name
Colfax Corp
Colgate-Palmolive Co
Colgate-Palmolive India Ltd
Compass Group PLC
Conagra Brands Inc
ConocoPhillips
Constellium SE
Corning Inc
Costco Wholesale Corp
Country Garden Holdings Co Ltd
Coupa Software Inc
Coupang Inc
Covestro AG
Credicorp Ltd
CreditAccess Grameen Ltd
CRISPR Therapeutics AG
CrossFirst Bankshares Inc
Crown Castle International Corp
CSL Ltd
CSX Corp
Cummins Inc
CVS Health Corp
Daiichi Sankyo Co Ltd
Danaher Corp
Danone SA
Dar Al Arkan Real Estate Development Co
Darling Ingredients Inc
Dassault Aviation SA
DBS Group Holdings Ltd
DCC PLC
Deere & Co
Deliveroo PLC
Delivery Hero SE
Delta Air Lines Inc
DENTSPLY SIRONA Inc
Derwent London PLC
Devon Energy Corp
Diageo PLC
Dlocal Ltd/Uruguay
DocuSign Inc
Dollar General Corp
Dollar Tree Inc
Dominion Energy Inc
Domino’s Pizza Inc
Downer EDI Ltd
Dr. Martens Plc
DraftKings Inc
DTE Energy Co
East African Breweries Ltd
Ecopetrol SA
Ecovyst Inc
EdenredElanco Animal Health Inc
Element Solutions Inc

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

2
3
4
3
1
2
4
1
2
4
1
3
1
4
2
2
4
2
3
2
2
4
3
4
2
2
4
1
1
1
1
4
2
3
3
2
2
2
2
3
2
4
2
2
4
2
3
1
2
4
1
2
4
1
4
3
1
2
2
3
3
1
4
1

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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 56

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
Enanta Pharmaceuticals Inc
Energy Transfer Operating LPEntergy Corp
Equifax Inc
Equitable Holdings Inc
Equity Residential
Essent Group Ltd
EssilorLuxottica SA
Estee Lauder Cos Inc/The
Etsy Inc
Eurofins Scientific SE
Evotec SE
Evraz PLC
Exact Sciences Corp
Exelixis Inc
Exelon Corp
Exxon Mobil Corp
Fidelity National Information Services Inc
Fifth Third Bancorp
First Abu Dhabi Bank PJSCFirstEnergy Corp
FirstRand Ltd

Five Below Inc
FleetCor Technologies Inc
Fortinet Inc
Fortive Corp
Freeport-McMoRan Inc
Fresenius SE & Co KGaA
Freshpet Inc
Frontier Developments PLC
Funding Circle Holdings PLC
Galapagos NV
Galaxy Entertainment Group Ltd
Galp Energia SGPS SA
Gazprom PJSCGEA Group AG
General Electric Co
General Motors Co
Genuit Group PLC
GlaxoSmithKline PLC

Glencore PLC
Global Blood Therapeutics Inc

Globo Comunicacao e Participacoes SA
GLP Pte Ltd
Godrej Consumer Products Ltd
Goldman Sachs Group Inc/The
Goodman Group
Great Portland Estates PLC
Groupe Bruxelles Lambert SA

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

1
2
1
4
4
4
4
4
4
2
1
2
2
3
2
4
4
1
2
3
3
1
1
2
2
3
4
2
4
1
2
4
4
4
4
3
1
1
1
1
2
2
1
3
1
2
4
2
1
1
4
4
2
1
2
4
3
2
3
2
4
1
2
4

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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 57

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Focus
ThemesCompany Name
Gruenenthal Pharma GmbH & Co KG
Grupo SBF SA
Guangzhou R&F Properties Co Ltd
Guardant Health Inc

Haier Smart Home Co Ltd
Halliburton Co
Halma PLC
Hamamatsu Photonics KK
Hanger Inc
Hannon Armstrong Sustainable Infrastructure Capital Inc
Hartford Financial Services Group Inc/The
HCA Healthcare Inc
HDFC Bank Ltd
HeidelbergCement AG
Helios Towers PLC
Heritage Financial Corp/WA
Hess Corp
Hillenbrand Inc
Hilton Worldwide Holdings Inc
Hitachi Ltd
Hologic Inc
Home BancShares Inc/AR
HomeServe PLC
Hon Hai Precision Industry Co Ltd
Honeywell International Inc
Hoshino Resorts REIT Inc
Hoshizaki Corp
Host Hotels & Resorts Inc
Howmet Aerospace Inc
HSBC Holdings PLC
Huazhu Group Ltd
Hubbell Inc
HubSpot Inc
Humana Inc
Huntington Bancshares Inc/OH
Hyundai Motor Co
IAC/InterActiveCorp
Iberdrola SA
ICICI Bank Ltd
IDP Education Ltd
Illinois Tool Works Inc
Imperial Brands PLC
Incyte Corp
Indorama Ventures PCL
Informa PLC

Infosys Ltd
ING Groep NV
Integrated Diagnostics Holdings PLCIntelbras SA Industria de Telecomunicacao Eletronica BrasileiraInterchile SA
Intercontinental Exchange Inc
International Container Terminal Services Inc

Corporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance





3
4
4
1
2
4
1
2
4
3
4
4
4
4
1
3
2
1
4
4
1
2
4
1
4
2
2
4
3
3
4
4
2
4
1
4
4
4
3
4
1
1
2
2
3
3
3
1
1
1
2
2
4
1
1
2
4
3
4
2
2
4
4
4

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


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



The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 58

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
Investec Ltd
Investec PLC
IRSA Propiedades Comerciales SA
J Sainsbury PLC
Japan Tobacco Inc
Jardine Matheson Holdings Ltd
JBG SMITH PropertiesJBS SAJD Sports Fashion PLC

JFE Holdings Inc
Jiangsu Hengrui Medicine Co Ltd
Johnson & Johnson
Johnson Matthey PLC
JPMorgan Chase & Co

Julius Baer Group Ltd
Kerry Group PLC
Keysight Technologies Inc
Keywords Studios PLC
Kilroy Realty Corp
Kimco Realty Corp
Kingfisher PLC
Kodiak Sciences Inc
Kohl’s Corp
Koninklijke Ahold Delhaize NV
Koninklijke Philips NV
Korn Ferry
Kosmos Energy Ltd
Kraft Foods Group Inc
Kraft Heinz Co/The
Kerry Group PLC
Land & Houses PCL
Larsen & Toubro Ltd
Lazard Ltd
LCI Industries
Legacy LifePoint Health LLC
LG Household & Health Care Ltd
Linde PLC

Live Oak Bancshares Inc
LL Flooring Holdings Inc
Lloyds Banking Group PLC
Loews Corp
Lonza Group AG
Macquarie Group Ltd
Marel HF
Marfrig Global Foods SA
MarketAxess Holdings Inc
Marsh & McLennan Cos Inc

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

3
1
3
2
1
4
1
2
1
1
1
1
1
2
2
4
2
2
2
4
4
1
3
1
1
4
2
4
4
1
4
1
2
3
4
2
4
1
1
4
1
4
3
3
2
2
3
1
3
3
4
2
3
1
4
4
4
3
3
1
1
3
4



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


The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 59

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Corporate
Engagement

Proxy Voting

Collaborations

Resources

Company Name

Quarter

Environmental

SocialGovernance

Mastercard Inc

1
3
4
1
4
4
2
4
3
3
4
2
4
3
2
4
4
1
4
1
4
2
4
4
4
1
1
1
3
4
2
1
2
4
4
3
1
4
1
4
2
4
4
4
4
1
2
1
1
1
3
2
2
3
4
2
4
4
1
4
2
4
2
1





Matador Resources Co
Match Group Inc
Matson Inc
Mattel Inc
McDonald’s Corp
McKesson Corp
Medley Inc
Melrose Industries PLC
Merck & Co Inc
Metalloinvest Finance DAC
MGM Resorts International
Microsoft Corp
Minerva SA/Brazil
Mirati Therapeutics Inc
Mitsubishi Corp
Mitsubishi Electric Corp
Mitsubishi UFJ Financial Group Inc
Mitsui Fudosan Co Ltd
MKS Instruments Inc
Moderna Inc
Molten Ventures PLC
Mondelez International Inc
Moncler SpA
MongoDB Inc

Monro Inc
Morgan Stanley
MorphoSys AG
Moscow Exchange MICEX-RTS PJSC
Motorola Solutions Inc
Mowi ASAMSCI Inc
Mueller Water Products Inc
Munich RE
Myers Industries Inc
NARI Technology Co Ltd
Nasdaq Inc
Naspers Ltd
National Australia Bank Ltd
National CineMedia Inc
National Express Group PLC
National Fuel Gas Co
National Grid PLC
National Instruments Corp
NAVER Corp
Nestle SA
Netflix Inc
Network International Holdings PLC
Neurocrine Biosciences Inc
New World Development Co Ltd

Focus
Themes







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

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


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

The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 60

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Corporate
Engagement

Proxy Voting

Collaborations

Resources

Company Name

Quarter

Environmental

SocialGovernance

Nextdoor.com Inc
NextEra Energy Inc

4
2
4
2
1
1
3
1
3
4
1
3
1
1
2
4
3
4
2
4
3
4
3
1
1
4
2
2
3
4
4
1
1
1
1
4
1
4
2
4
2
2
4
4
2
2
4
2
4
3
4
2
4
3
2
3
4
1
2
3
1
1
2
4

NexTier Oilfield Solutions Inc
Nielsen Holdings PLC
NIKE Inc
Ninety One PLC
Nippon Paint Holdings Co Ltd
Nippon Telegraph & Telephone Corp
NiSource Inc
NN Group NV
Nordstrom Inc
Norfolk Southern Corp
Northern Star Resources Ltd
Northrop Grumman Corp
Novartis AG
Novocure Ltd
Novolipetsk Steel PJSCNVIDIA Corp
NVR Inc
NXP Semiconductors NV

Oak Street Health Inc
Ocado Group PLC

Okta Inc
Ontex Group NV
Oportun Financial Corp
O’Reilly Automotive Inc
Ortho Clinical Diagnostics Holdings PLC
Otsuka Holdings Co Ltd
Oxford Nanopore Technologies PLC
PACCAR Inc
Pacific Premier Bancorp Inc
Park Hotels & Resorts Inc
Paycom Software Inc
PayPal Holdings Inc
Pennant Group Inc/The
PepsiCo Inc
PerkinElmer Inc
Persol Holdings Co Ltd
Petco Health & Wellness Co Inc
Petroleo Brasileiro SA
Petroleos Mexicanos
Pfizer Inc
Playtech Plc
PNM Resources Inc
Polycab India Ltd
Portland General Electric Co
POSCO
PPG Industries Inc
Prologis Inc

Focus
Themes








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


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

The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 61

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
ProSight Global Inc
Prosus NV
Prothena Corp PLC
Prysmian SpAPTC Inc
PTT Exploration & Production PCL
PTT Global Chemical PCL
Public Service Enterprise Group Inc
QUALCOMM Inc
Ralph Lauren Corp
RBC Bearings Inc
RealReal Inc/The
Reata Pharmaceuticals Inc
Recruit Holdings Co Ltd
Red Robin Gourmet Burgers Inc
Regeneron Pharmaceuticals Inc
Rentokil Initial PLC

Repsol SA
REX American Resources Corp
RH
Rio Tinto Ltd
Rivian Automotive Inc
RLX Technology Inc
Rockwell Automation Inc
ROCKWOOL International A/S

Ronshine China Holdings Ltd
Roper Technologies Inc
Rosneft Oil Co PJSC
Rotork PLC
RWS Holdings PLC
Sage Therapeutics Inc
Samsung Electronics Co Ltd
SanofiSarepta Therapeutics Inc
Sasol Ltd
Saudi Arabian Oil Co
Saudi National Bank/The
SBA Communications Corp
Sberbank of Russia PJSC
Scentre Group
Schneider Electric SE
Seagen Inc
SEB SA
Select Medical Holdings Corp
Sempra Energy
Semtech Corp
Sensirion Holding AG
ServiceNow Inc
Seven & i Holdings Co Ltd
Severstal PAO
Shimadzu Corp
Shinhan Financial Group Co Ltd
Shockwave Medical Inc

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

1
3
4
1
1
2
4
1
3
4
3
1
2
1
4
4
2
4
1
2
4
4
2
3
1
1
2
1
4
1
1
4
4
3
4
2
1
4
1
1
2
4
1
1
2
4
4
3
1
2
4
1
3
2
2
4
2
3
4
1
3
4
3
2



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



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





The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 62

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

ESG
Integrationin Action

Company Name
Shop Apotheke Europe NV
Shopify Inc
Shoprite Holdings Ltd
Siemens AG
Siemens Healthineers AG
Signature Bank/New York NY
SITC International Holdings Co Ltd
SiteOne Landscape Supply Inc
Skyworks Solutions Inc
SL Green Realty Corp
Smith & Nephew PLC
Smiths Group PLC
Snap IncSouth32 Ltd
Southern Co/The
Splunk Inc
Sprouts Farmers Market Inc
SPX Corp
SS&C Technologies Holdings Inc
SSP Group Plc
Starbucks Corp

State Bank of India
State Street Corp
Steadfast Group Ltd
Steel Dynamics Inc
Stericycle Inc
StoneCo Ltd
Stora Enso Oyj
Strategic Education Inc
Sumitomo Corp
Summit Materials Inc
Swedbank AB
Swire Properties Ltd
Sysco Corp
Taiheiyo Cement Corp
Taiwan Semiconductor Manufacturing Co Ltd
Takeda Pharmaceutical Co Ltd
Telefonaktiebolaget LM Ericsson
Telefonica Deutschland Holding AG
Teleperformance

Tencent Holdings Ltd
Tesco PLC
Tetra Tech Inc
Texas Capital Bancshares Inc
Texas Instruments Inc
Texas Roadhouse Inc
Textron Inc

Thai Oil PCL
Thales SA

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

4
4
4
4
1
4
1
4
2
4
1
4
1
3
1
2
3
2
4
1
2
1
1
1
4
1
3
4
1
4
4
4
4
3
3
2
2
2
2
4
2
2
3
3
4
1
2
2
3
1
2
3
4
1
4
4
3
2
2
2
4
4
1








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
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


The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 63

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
THG PLCTimes China Holdings Ltd
TJX Cos Inc/The
TMK PJSCTMX Group Ltd
Torrent Pharmaceuticals Ltd
TotalEnergies SE
Toyota Motor Corp
Tractor Supply Co
Trainline PLC
Transaction Capital Ltd
TransUnion
Transurban Group
Treasury Wine Estates Ltd
TreeHouse Foods Inc
Trex Co Inc
TRG Pakistan
Trimble Inc
Truist Financial Corp
Turkiye Sise ve Cam Fabrikalari AS
Turning Point Therapeutics Inc
Twilio Inc
Tyman PLCUBS AGUBS Group AG
Ukrainian Railway
Ultragenyx Pharmaceutical Inc
Unilever PLC

United Parcel Service Inc
United Rentals Inc
United Therapeutics Corp
Upwork Inc
Van Lanschot Kempen NV
Verisk Analytics Inc
Vertex Pharmaceuticals Inc
Victorian Plumbing Group PLC
Virtus Investment Partners Inc
Visa Inc
Vnet Group Inc
Vodafone Group PLC
Volcan Cia Minera SAA
Volkswagen AG
Vonovia SE
VPG NV
Vulcan Materials Co
Wal-Mart de Mexico SAB de CV
Walmart Inc
Walt Disney Co/The
Warby Parker Inc
Waste Connections Inc
Weir Group PLC/The
Wells Fargo & Co

ESG
Integrationin Action

Focus
ThemesCorporate
Engagement

Proxy Voting

Collaborations

Resources

Quarter

Environmental

SocialGovernance

1
4
4
3
3
3
1
3
2
3
4
1
1
1
2
4
4
2
1
4
4
4
1
1
4
2
1
4
1
3
4
1
1
2
4
1
4
3
1
3
1
4
2
4
1
3
4
1
1
2
1
1
1
1
1
1
4
2
2
1
4
1
2
4



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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
| 64

Engagement
Data

Foreword

2021
in Review

Our ESGInvestingApproach

Company Name
Wesfarmers Ltd
West China Cement Ltd
Westlake Corp
Westpac Banking CorpWEX Inc
Weyerhaeuser Co
Whitbread PLC
Williams Cos Inc/The
Wilmar International Ltd
Winmark Corp
Wizz Air Holdings Plc
Woolworths Group Ltd
Worley Ltd
WPP PLC
Wynn Resorts Ltd
X5 Retail Group NV
Xero Ltd
Xylem Inc/NY
Yoma Strategic Holdings Ltd
Yum China Holdings Inc
Yum! Brands Inc
Zalando SE
Zebra Technologies Corp
Zomato Ltd
Zurich Insurance Group AG

Zynga Inc

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Quarter

Environmental

SocialGovernance

4
4
4
4
2
4
2
4
1
3
2
3
1
2
4
2
2
2
3
1
1
1
4
3
1
1
3
3
1
4
4
2

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
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








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The specific securities identified and described are for informational purposes only and do not represent securities purchased, sold orrecommended by T. Rowe Price. No assumption should be made that the securities identified were or will be profitable.
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Foreword

2021
in Review

Our ESGInvestingApproach

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Risks
International investments can be riskier due tothe adverse effects of currency exchange rates,
differences in market structure and liquidity, as
well as specific country, regional, and economic
developments. The risks of international investing
are heightened for investments in emerging
market and frontier market countries. Emerging
and frontier market countries tend to haveeconomic structures that are less diverse andmature, and political systems that are less stable,
than those of developed market countries.
The value approach to investing carries the riskthat the market will not recognize a security’s
intrinsic value for a long time or that a stock
judged to be undervalued may actually beappropriately priced.
Fixed income securities are subject to credit risk,
liquidity risk, call risk, and interest rate risk.

As interest rates rise, bond prices generally fall.
Investments in high yield bonds involve greaterrisk of price volatility, illiquidity, and default thanhigher-rated debt securities.
Impact investing strategies may not succeed ingenerating a positive environmental and/or social
impact. The incorporation of environmental and/or
social impact criteria into an investment process
may cause a strategy to perform differently froma strategy that uses a different methodology toidentify and/or incorporate environmental and/or
social impact criteria or relies solely or primarily
on financial metrics.
There is no assurance that an investment objective
will be achieved.
Index data is for illustrative purposes only and is
not indicative of any specific investment. Investors
cannot invest directly in an index.

Additional Disclosures
MSCI and its affiliates and third party sources and providers(collectively, “MSCI”) makes no express or implied warranties
or representations and shall have no liability whatsoever withrespect to any MSCI data contained herein. The MSCI data
may not be further redistributed or used as a basis for otherindices or any securities or financial products. This report is not

approved, reviewed, or produced by MSCI. Historical MSCI data
and analysis should not be taken as an indication or guaranteeof any future performance analysis, forecast or prediction. Noneof the MSCI data is intended to constitute investment advice ora recommendation to make (or refrain from making) any kind ofinvestment decision and may not be relied on as such.

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Foreword

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Important Information
This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertaketo give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision.
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and services.. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can
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