VOTING &ENGAGEMENTEXTRA-FINANCIALREPORT

2021 REPORTThe sustainable
investor for achanging world

ABOUT US
BNP Paribas Asset Management (BNPP AM) is BNP Paribas
Group’s dedicated asset management business andemploys 2,749 people in 32 countries, including a largepresence in Europe and the Asia-Pacific region. Throughthe BNP Paribas integrated model, BNPP AM has accessto a broad international client base and has close relationships with BNP Paribas’ distribution networks. Ranked
the 10th largest asset manager in Europe1, BNPP AM currently manages €537 billion of assets and benefits fromthe expertise of around 500 investment professionals andover 400 client-servicing specialists, serving individual,
corporate and institutional clients in 69 countries.

BNP Paribas Asset Management’s purpose is to achieve
long-term sustainable investment returns for its clientsby placing sustainability at the heart of its strategy andinvestment decision-making.

537bn

2,749

**

€

Total AUM*

PeopleENGAGEMENT AND VOTING ONE OF OUR 6 PILLARS OF SUSTAINBLEINVESTMENT

We offer investment solutions for individual investors(through internal distributors within BNP Paribas and external distributors), and corporate and institutional investors including insurance companies, pension funds, official
institutions and consultants. We offer portfolio investment
expertise in line with clients’ long-term sustainable performance expectations, including active, conviction-based
strategies, emerging markets, multi-asset investments,
private assets and liquidity solutions.

Our strategy to deliver sustainable investment is built on six pillars, four of which are systematically
implemented across our investment strategies. Together, this approach strengthens the way we invest, including
how we generate investment ideas, construct optimal portfolios, control for risk and use our influence withcompanies and markets. It is designed to respond to the diverse needs of our broad client base while protecting
their interests.

1. Source: IPE Top 500 Asset Managers 2021.

32

THE 6 PILLARS OF OUR SUSTAINABLE
INVESTMENT APPROACH

330.5bn

Locations1.

4.

Improve risk-adjusted
returns

Enhance investment decision-making,preserve long-term market performance

ESG INTEGRATION ACROSS
ALL INVESTMENTS€

ESG AUM***

ESG* AUM: assets under management.
** Joint Ventures included.
*** ESG (Environmental, Social & Governance) AUM: assets under management in scope of our Global Sustainability Strategy.

4%
17%

28%

23%

Distribution

18%

11%

2.

STEWARDSHIP(VOTING, ENGAGEMENT)

Client types2

7%

36% 12%

1%
2%
3%
6%

ENHANCED ESG
THEMATIC
IMPACT

6%

20%

Protect company value, inﬂuence soundregulatory framework, promote bettersocial and environmental outcomes

6.

3.

RESPONSIBLE BUSINESS CONDUCTAND SECTOR-BASED EXCLUSIONSCSRWALKING THE TALK
Corporate practice anddisclosures should matchor exceed the standards
we expect from the entities
in which we invest

Avoid reputational, regulatory
and stranded asset risk

10%
57%

20%

28%

12%

17%
13%

34%

15%

Fixed income

GlobalInstitutional

Insurance

Multi-asset & solutions

EuropeGroup networks

Corporates

EquityNorth America

Wholesale

Retail Clients

Money Market

APAC

JVs

Pension Funds

Alternatives

Latin America

Private Clients

Emerging

Official Institutions

Other

Others

2. Excluding investment in our own funds – €492bn.
Figures may not add to 100% due to rounding.

2

AUM by geography

5.

Allocate to sustainable
investment opportunities

SUSTAINABLE

The First Four Pillars
Apply Across Our
Investment Approach

A WELL-BALANCED, GLOBALLY DIVERSIFIEDAND EUROPEAN-ROOTED ASSET MANAGER
AUM by asset class

FORWARD-LOOKING PERSPECTIVE:
THE "3Es"

This report presents the engagement and voting we carried out during 2021 on behalf of our clients todeliver a sustainable future. Our 2021 Sustainability Report sets out how we delivered on all otherdimensions of our sustainability strategy.

Asset Managers
3

OUR APPROACH:
TO BE A FUTURE MAKER
Voting and engagement form oneof the six pillars of our approach tosustainable investment and are fully
embeddedin
ourGlobalSustainability Strategy (GSS).
To ensure that these activities
are effective, consistent andsupportiveof
ouroverallobjectives as fiduciaries, they
are not only rooted in our GSS,
but are amplified in our
Stewardship Policy and ourGovernance and Voting Policy,
each reviewed annually, revised asneeded, and approved by the
Sustainability Committee and theProxy Voting Committee.
Our voting and engagement activities inform our investment
decisions on a day-to-day basis,
within the framework of our GSS
and ESG integration guidelines.
Similarly, our engagement informs
our ESG analysis and ratings ofissuers.

OUR CONVICTION: VOTINGAND ENGAGEMENT ARE BOTH
AN OBLIGATION AND
AN OPPORTUNITY

VotingEngagement

Public Policy
Advocacy

A priority for us aspart of our ongoing
dialogue withthe companies inwhich we invest is
to promote good
governance practices.

• Engagement related
to voting

Active engagementwith regulators helps
to shape the markets
in which we invest
and the rules thatguide and govern
company behaviour.

• Thematic
engagement• Engagement linked
to ESG performance.

We use three tools — voting, engagement and public policy advocacy —to encourage companies to improve their performance and accountability on
sustainability topics, and to urge policymakers to deliver legislation, regulationand standards that foster sustainable, equitable development. These activities
help us to better manage ESG risks in the near and long term, enhance ourknowledge and understanding as an investor and generate positive impact —all of which benefit our clients.

• As a sustainable investor, we believethat we should use proxy voting,engagement and policy advocacy to
influence companies and the world
for the better.
• If done well, our voting and engagement can reduce risk, unlock value
and impact the world around us in apositive way through better sustainability practices and transparency.
• We believe that engagement isgenerally more effective than exclusion, but divestment can be effective
as a last resort.
• Appropriate and comprehensive
corporate disclosure is a fundamental requirement for sound investment decision-making.
• Collaboration with other long-term
investors and stakeholders can help
achieve our common environmental
and social aims, particularly whenengaging with companies and regulatory bodies.

“We have a very ambitious voting policy
aiming to bring about real change withincompanies. In particular, we have strengthened
our requirements in our climate and diversity
guidelines. Beyond voting, we also engage indialogue with companies and public authorities
to improve their ESG4 practices. Our interactions
with the boards and management of firms large
and small, around the world, drive them toimprove their strategies.”
Michael Herskovich

Global Head of Stewardship

SCOPE OF OUR
VOTING ANDENGAGEMENT ACTIVITIESOur voting and engagement policies
apply to BNP Paribas Asset Management Holding (BNPP AM Holding)5,
the parent entity of BNP Paribas
Asset Management France (BNPP AM
France), which is the asset management business of BNP Paribas Group.
• As an integral element of our investment process, we vote on behalf ofour clients at the annual general
meetings of companies in which
we invest. Voting rights are exercised on equities for mutual funds,
UCITS 6 , AIF, foreign investment
funds, mandates and for Employee
Investment Funds for which voting
rights are delegated to BNPP AM.
We are committed to consistently
exercising our voting policy acrossportfolios and markets, subject totechnical and legal constraints. We
also accommodate certain custom
voting policies for specific client
dedicated funds or mandates. For
pooled funds, our custodian andvoting providers’ platforms are
not currently set up to enable this.
External investment managers
to whom we delegate portfolio
management are required to have aproxy voting policy and to exercise
voting rights in line with market
practices and report regularly on
results achieved. We engage withcompanies in the context of voting
at their AGMs, coordinating suchdialogue with portfolio managers,
ESG analysts and stewardship analysts, so that final voting decisions
feed into the qualitative elements of
our ESG ratings.

• Our engagement practices encompass our public equity holdings— both actively and passively
managed — and extend beyond
them. We regularly engage withissuers of green bonds to help us
understand the environmental andsocial risks and expected benefitsof the issuance, ensure that theinvestment is appropriate for ourclients, and to promote better
sustainability practices and public
reporting. We also engage withsovereigns on material ESG issues,
including climate change, which
may impact the value of our investments in sovereign bonds or theirability to meet their obligations
to investors. Within our private
debt business, we engage corporate borrowers on a wide rangeof ESG characteristics (including
compliance with our Responsible
Business Conduct policy, ESG risks
and opportunities assessment at
a project level, environmental andclimate assessments, etc.) andapply strict environmental standards to our Real Assets portfolios.

DISCOVER HOW MICHAEL DRIVES SUSTAINABILITY
am.bnpparibas.com/sustainable-investor
4. Environmental, Social and Governance.

4

5. All 100% owned entities of BNPP AM Holding, including BNP Paribas Asset Management UK (Limited), are subject to and adhere to BNPP AM Policies.
6. Undertakings for Collective Investment.

5

ESCALATIONPROCESS
Investor-issuer dialogue is thefoundation of good stewardship – itallows for trusting relationships to
be built over time, permitting candid
solution-oriented discussions about
issues that might not otherwise
be addressed. Dialogue, however,is a two-way street and there aretimes when stronger measures arenecessary to encourage a company
to come to the table and discuss ourconcerns.

VOTING:
EXERCISINGRIGHTS ANDRESPONSIBILITIESWhen more robust action isrequired to ensure protection andenhance-ment of our clients’interests and shareholder value,
BNPP AM can, inter alia, makepublicstatements,
proposeshareholder resolutions, call an
extraordinary
generalmeeting or intervene jointly withother institutions. These decisions
are taken on a case-by-casebasis, to ensure that ourconcerns have been properly
heard and dealt with. Our
shareholder
proposalfilingstrategy is approved by the
Proxy Voting Committee once a
year, as are specific decisions about
filing each shareholder proposal.

Our approach to voting is governed by a set ofprinciples that inform our expectations of the companies we invest in and guide us in carrying out
our ownership duties. Our Governance and Voting
Policy sets the rules we apply to proxy voting,including on ESG-related matters. We vote proxies
solely in our clients’ best interests — they are theultimate beneficiaries of the funds for which we areresponsible. We seek to develop a constructive andpositive approach with the boards of companies
we invest in, clearly setting out our expectations
as a diligent steward of assets. However, we will
not hesitate to abstain or oppose management, or
support shareholder proposals, when applying our
voting guidelines.

External recognition: BNPP AM a leader in engagement and voting

April 2021. In its study “TheChanging Climate on Investor
Behaviour”, the shareholder
advisory firm Squarewell analysed
30 of the world’s largest asset
managers’ investment policies
and approaches to climate change
through voting and engagement.
BNPP AM was recognised as aleader in the following categories:
voting behaviour on climatechange votes, overall policies
and approach to climate change
and submission of shareholders’proposals on climate lobbying.

6

December 2021. In a study on
investor engagement on the
climate crisis, Ceres ranked
BNPP AM second among theworld’s top asset managers interms of supporting climaterelated shareholder proposals,
including 100% support ofproposals flagged by Climate
Action 100+.

December 2021. In its study“Voting Matters”, the NGO
ShareAction analysed how 65 of
the world’s largest asset managers
voted on 146 ESG resolutions.
BNPP AM ranked second in termsof our support of environmental
and social proposals in 2021 andwas recognised as one of a small
number of asset managers that
filed shareholder proposals.

To help us implement our policies, we use the services of proxy voting providers. These include ISS,
which provides global voting research and a voting
platform for all companies, and Proxinvest, which
provides research on French companies. However,
we do not delegate decision-making authority
to them; we make all voting decisions for every
shareholders’ meeting internally with no outsourcing of these decisions.
Our 2021 full proxy voting record is publicly available on our website. The following is a summaryof our voting activity in 2021. Additional details on
our most significant votes are available in our 2021
Voting Report.

KEY REVISIONS TO OUR
VOTING POLICY IN 2021
Our policy and guidelines for engagement andvoting are reviewed annually in order to reflect
the evolution of corporate governance codes andmarket practices. In 2021, the main amendments
to our Voting Policy were:• Gender diversity of Boards of Directors:– Vote “against” all appointments of men if theBoard of Directors does not include at least
15% women (Asia/Latin America), with possible
exceptions when the percentage is between
10% and 15%.
– Apply the 30% female threshold for South Africa(the current threshold for Europe and North
America).
– Affirm our longer-term ambition to have a 40%
female threshold by 2025.
• Climate-lobbying practices: Include this as apotential reason for opposition to financial statements, discharge of board or opposition to electionof directors.
• Combined Chair/CEO: Introduce clarifications onwhen we will abstain rather than vote against the
combined role.

7

VOTING SCOPE
FOR 2021
Each year, we monitor the total votable shares ofthe portfolios we manage and assess the percentage of votes exercised during the year in alignment
with our voting policy. Our selection process of theshares for which we exercise voting rights aims toconcentrate our efforts on positions that are widely
held across our assets under management, and weparticipate in shareholder meetings of companies
in which our collective investment schemes hold asignificant portion of the capital.
In 2021, the total assets under management thatfell within our voting scope (which is beyond UCITS
with mandates) was almost €66 billion. Within
this scope, we voted where our aggregated holding
positions met at least one of the three following
conditions:• They represented 90% of accrued total stock
positions.
• They made up 0.1% or more of the company’smarket capitalisation.
• Ad-hoc demand5.
In 2021, we did not have a securities lending program in place.

KEY VOTINGSTATISTICS

Within our voting scope, we voted at
2,098 general meetings in 2021, primarily in Europe
Vote on management proposals

Our voting activity and opposition rates
have increased over the past 3 years

2,098

2019

FOR
67%

1,870

2020

2021

ASIA ANDOTHER
REGIONS27%

AGAINST
28%

Total AGMs voted over 3 years

1,758

Geographic breakdown

ABSTAIN
5%

EUROPE47%

NORTH
AMERICA
26%

Focus on regions

Opposition rate over 3 years

28%

32%

EUROPE33%

NORTH AMERICA

FOR
76%

2019

2020

FOR
50%

2021

Of 28,276 resolutions we voted on, 27,450 were
submitted by companies and 826 by shareholders.
Among the resolutions submitted by companies, we
voted in favour of 67% of management resolutions(18,304 resolutions) and opposed 33% of management proposals (we abstained on 1,328 items andvoted against 7,818 items).

ABSTAIN
5%
Management
resolutions
voted in 2021:
Opposition rate:

ASIA-PACIFICAND OTHER REGIONS

16,08824%

AGAINST
19%

FOR
57%

ABSTAIN
1%

5,849
50%

AGAINST
49%

ABSTAIN
8%

AGAINST
35%

5,513
43%

5. Full voting scope represented 2,098 general meetings voted out of a possible 3,916.

8

9

FOCUS ON
SHAREHOLDER PROPOSALS

FOCUS ON RESOLUTIONSWHERE WE ABSTAINED OR
VOTED AGAINST MANAGEMENT
Resolutions
voted

Vote for

Vote against
or abstain

Percentage
of opposition

3,289

1,316

1,973

60%

FINANCIAL OPERATIONS

2,671

1,632

1,039

39%

BOARD ELECTIONS

14,348

9,091

5,257

37%

OTHER RESOLUTIONS6

7,142

6,265

877

12%

TOTAL

27,45018,304

9,146

33%

EXECUTIVE COMPENSATION

Executive compensation (60% opposition vs 59%
in 2020)
Our opposition to executive compensation plans(stock options, restricted stock plans, severance
payments and “say on pay” proposals) falls into thefollowing general categories:• Lack of transparency on compensation policy(volume, weight, nature of the performance criteria, targets, etc.).
• Compensation practices out of line with stakeholders’ interests, with excessive or disproportionate
amounts relative to the company’s performance.
• “Pay for failure” approach in place, with
non-challenging performance criteria.

Shareholder proposals are usually opposed bymanagement. Therefore, a vote in favour of the
proposal is a vote against management’s recommendation. We voted in favour of shareholder proposals when they were in line with the long-term
interests of the company and were warranted given
the prevailing practices of the company. However,
we abstained when we believed the proposal to beinappropriate given the company’s specific circumstances or already applied in practice.

The focus of our opposition, excluding
shareholder proposals that are analysed
below, was on three topics: executive compensation, financial operations and board
elections. Similar detail on all other types ofvotes is available in our 2021 Voting Report.

Board elections (37% opposition vs 36% in 2020,
due mainly to our gender diversity policy)
Our votes in opposition to individual directors generally indicate our belief that there is weak corporate
governance or an issue regarding the balance ofpower. Most votes against directors fall into thefollowing categories:• A non-independent director with insufficient board
independence.
• Non-compliance with our rules on gender
diversity.
• Directors with poor attendance or terms of mandate exceeding four years.

We again demonstrated very strong support forsocial proposals (100%) and for environmental andclimate change proposals (89%).

Shareholder proposals (global)
Our rate ofsupport forshareholders’proposalsincreasedin 202170%
vs 63% in 2020

VOTE FOR
70%

577

826

AGAINST147 18%102

ABSTAIN
12%• Compensation not oriented toward the long term.
Financial operations (39% opposition vs 42% in 2020)
We oppose management proposals regarding financial operations, which generally request a sharecapital increase, for the following reasons:• Global volume considered too high (authorisations
exceed 50% of the share capital).
• Share capital authorisation without pre-emptive
rights and without a specific object, leading toexcessive dilution for current shareholders (morethan 5% of share capital or 20% with a specificpurpose).
We also vote systematically against all anti-takeover devices.

PROMOTION OF ENVIRONMENTAL
AND SOCIAL DISCLOSURE• Climate considerations – the company did notprovide sufficient information on its CO2 emissions
or did not want to communicate or constructively
engage about its business strategy to mitigate andadapt to climate change.

Promoting good corporate governance standards
and encouraging businesses to improve their socialand environmental practices and their disclosure,are essential components of our ownership responsibilities. Our clients benefit when the companies
we invest in are managed in the best long-term
interests of all their key stakeholders.

• Our Responsible Business Conduct (RBC) Policy –the company is in breach of our principles. These
are typically companies we hold through indexed
products where we continue to use our voicethrough voting.

In accordance with our voting policy, we opposedmanagement resolutions concerning the approvalof financial statements, discharge of the board,or election of directors (depending on the market)
due to:In 2021, we opposed 969 resolutions at 168 companies for these reasons (364 resolutions due to ourclimate-related expectations and 605 resolutions
due to our RBC policy) – a substantial increase compared to 2020 (451 resolutions at 66 companies).

6. Approval of accounts, appointment and remuneration of auditors, mergers and acquisitions, anti-takeover measures, etc.

10

11

ENGAGEMENT
Meaningful engagement with issuers enhances ourinvestment processes and enables us to manage
long-term risk for our clients by promoting strong
ESG practices in the companies in which we invest
on their behalf. Notably, this commitment toengagement extends beyond our actively and passively managed equity investments, to our fixedincome and private loans business, including engagements with sovereigns.
Our long-term investment horizon places a company’s corporate governance arrangements and thequality of its senior management teams at the heartof our investment decisions. Sound governance iscritical for the long-term operating and financial
performance of a company and is therefore acentrepiece of our engagements during and outside
the voting season. Given our global presence andthe wide geographic scope of our clients’ holdings,
we endeavour to engage consistently across all
regions in all priority areas.

OVERVIEW OFOUR ENGAGEMENT
The number of companies we engaged
with and the volume of interactions
have increased over the last 3 years
Corporate engagement over 3 years

376
219

2019

528

494
281

2020

296

We undertake three distinct typesof engagement

1.
Engagement related to corporate
governance and voting
Promote good governance practices
among the companies we invest in,as part of our ongoing dialogue withthem. The objectives vary by company, based on our analysis of theirperformance on governance issues.

2.

EuropeNorth
America

Asia Pacificand otherregions

ENVIRONMENT

192

86

65

41

SOCIAL

142

69

52

21

GOVERNANCE

218

126

68

24

TOTAL NO. OF COMPANIES

296

188

52

86

In 2021, our stewardship team engaged with
296 companies through 528 interactions. These
engagements related to environmental issues in
35% of cases, social issues in 26% of cases andgovernance issues in 39% of cases. Portfolio managers also engaged with companies in the course of
their investment process, but that engagement is
not presented here.

Corporate engagement on ESG

Thematic Engagement
Engaging with companies on the
3Es: Energy Transition, Environmental Sustainability and Equality andInclusive Growth. The objectives
are specific to each company basedon its impact on the theme, its
ESG score or analysis by external
initiatives.

ENVIRONMENT
35%

SOCIAL
26%

GOVERNANCE
39%

3.
Engagement linked
to ESG performance
Engage both companies andsovereigns in relation to their ESG
performance. The objectives vary:
they can be to clarify whether
companies are in breach of our
RBC policies, address a poor ratingon our ESG scores or linked to
specific events, like green bondissuances.

2021

Number of companies engaged
Number of interactions

12

TOTAL

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

Proportion of our engagement related to each type in 2021

“When we meet with management teams,
we don’t just ask about financials, new products,
or their competitive environment; throughfundamental research, we carefully consider
opportunities based on a range of ESG risk
criteria, including their product roadmap,
their supply chain, as well as their social andgovernance risks. We then focus on those issues
and which specific metrics they can improve.”
Pamela Hegarty

Senior Portfolio Manager and Equity Analyst

GOVERNANCE
AND VOTING40%
ESG PERFORMANCE

61

119

296
49

THEMATIC (“3Es”)
21%

DISCOVER HOW PAMELA DRIVES SUSTAINABILITY

am.bnpparibas.com/sustainable-investor

ESG PERFORMANCE

67(corporates)

22,5%(green bonds& sovereigns)

16,5%

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

13

During the 2021 proxy season, we had 238 interactions with 151 companies related to voting issues,
an increase compared to 2020 (255 interactions
with 140 companies). Of these, 43 were successful(28%), a similar success rate to 2020.

CORPORATE ENGAGEMENT
IN ACTION
We take two different approaches to corporate
engagement:• Direct corporate engagement: BNPP AM maintains
an active program of direct corporate engagement
on a wide range of governance, social and environmental issues. It is designed to enhance thelong-term value of our shareholdings and foster
best practices. Successful engagements are often
based on the development of long-term relationships built on trust and mutual understanding.
Every year, we hold a wide range of meetings withissuers to elicit information for investment decision-making and ESG rating. We also participate
in meetings with issuers to express a point of view
and advocate for a change in policy or practice.
• Collaborative corporate engagement: Collaboration with other long-term investors and key
stakeholders helps us achieve our common aims,
particularly with respect to mitigating systemicrisks. We are active members of formal and informal groups and initiatives internationally thatfacilitate communication between shareholders
and companies on ESG matters. We also engage
collectively on public policy and have a classaction policy in place.

SEE PAGE 68 FOR A LIST OF COLLABORATIVEINITIATIVES OF WHICH WE ARE MEMBERS
AS OF 2021

14

Outside the annual general meeting season, we aim
to conduct regular dialogue with companies covering topics such as strategy, long-term performance,risk management, ESG issues and other emerging
concerns.

In this section, we set out selected examples of ourengagements to give a sense of the nature of ouractivities. Further details are available in our 2021
Voting Report.

ENGAGEMENT LINKED TO
GOVERNANCE AND VOTING
During proxy season, we engage in dialogue withcompanies either on our own initiative or at therequest of the issuer, and we generally concentrateon our largest holdings. The goals of such engagements are:• Communicate our voting policy to promote good
corporate governance and prepare for the next
general meeting of the issuer.

RENEWAL OF SHARE ISSUANCE AUTHORITIES
Activity: After an initial discussion earlier in the yearwith the Lead Independent Director of Jazz Pharmaceuticals (Ireland), we had a dialogue with the CEO prior to
the July 2021 AGM. We highlighted our concerns that a
proposal was in violation of our limitations in terms ofamount (50% overall, 20% without pre-emptive rights,
while the company was requesting 392%) and duration(requesting approval every five years, while standardpractice in the UK and Ireland is an annual vote).

• Obtain additional information on individual voting
proposals.
• Express our concerns about any specific resolutions that go against our voting policy.

DEFINING SUCCESS
We consider a voting-related engagement
to be successful if the company either
withdraws the proposal we are opposing,modifies the proposal so that we can
support it, or provides relevant additional
information. However, a potential changeof our voting decision is not the only criterion for success; some companies modify
their practices the following year and are
not necessarily counted in the successful
engagement statistics.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

Outcomes: As the company was not willing to modify
its approach, we decided not to support the proposal,
which was submitted to a vote at the AGM on July 29,
2021. The proposal was rejected (supported by 64%,
but required support from 75% of votes cast). Following
this rejection, the company convened an extraordinary
general meeting and reduced the proposal without
pre-emptive rights to 10% of the share capital, andthe duration of the authorisation requirement from
60 months to 18 months. Given the lower potential
share capital increase and duration, as well as thisgrowth company’s need to access capital, we supported
the revised proposal at the September meeting and it
was approved.

BOARD COMPOSITION AND GOVERNANCE
Activity: We engaged with the CEO of Sword Group(Luxembourg) in 2021 to highlight some concerns regarding the company’s board composition. Indeed, its
Board of Directors comprised only 17% independent
members (versus 50% required by our voting policy),
and although the company had proposed the appointment of its first female director at the 2021 AGM, which
would result in 17% female representation, this level
was still below our targeted 30% threshold. During theengagement, we also highlighted the absence of nomination and remuneration committees, transparency
issues, the problematic practice of combining the chair
and CEO positions and the lack of clear communication
about the structure and features of the CEO’s remuneration.

DIRECT
ENGAGEMENTDIRECT
ENGAGEMENT

Outcomes: After our engagement, in August 2021 thecompany made a public commitment to have, by June
2022, an “undisputed independence of a greater number of directors, have more women represented on the
Board, and better communication on the work of the
Audit, Remuneration and Appointments Committees.”
The company’s quick public response was an important
step, signalling its willingness to improve its corporate
governance practices. We will continue to engage withthe company to align its practices with our guidelines
to the maximum extent possible.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

15

ACHIEVING THE NET ZERO BENCHMARKTHEMATIC ENGAGEMENT: THE 3Es
The “3Es” — Energy Transition, Environmental Sustainability, Equality and Inclusive Growth — serveas the focus of our global sustainability engagement
efforts as future makers.
Within this framework, we establish an in-depth
dialogue with companies encouraging them to:• Align their strategies with the goals of the Paris
Agreement.
• Improve their environmental footprint (such as
improving their water use efficiency).
• Provide greater opportunities for women at alllevels of the organisation.
• Adopt more equitable and transparent remuneration policies to ensure that wealth is distributed
more fairly across the value chain, where value
is created.

EnergyTransition

Energy transition: making
a substantive
contribution Equality &Environmental
Sustainability energy transition
Inclusive Growth
to the low-carbon
Climate Action 100+

Most of our engagement on the energy transition isundertaken through Climate Action 100+ (CA100+).
Launched in 2017, this investor-led initiative
works to ensure that the world’s largest corporate
greenhouse gas emitters take necessary action on
climate change. It was formed in the wake of the2015 Paris Agreement, a global accord signed bynearly 200 countries (and ratified by 170), aiming
to restrict the rise in global average temperatures towell below two degrees Celsius above pre-industrial
levels, and pursuing efforts to limit warming to
1.5 degrees Celsius. We are one of more than
615 investors, collectively responsible for morethan $60 trillion in assets under management,that engage collaboratively with major emitters to
improve climate change governance, cut emissions
and strengthen their climate-related financial
disclosures.
In 2021, we led or co-led engagements with ninecompanies in Europe, the US and Asia: Iberdrola,
Naturgy, Saint-Gobain, Repsol, Stellantis, Sinopec,
Power Assets Holdings, PTT Pcl and ExxonMobil.
We also take part in dialogues that are led by otherinvestors in the CA100+ coalition and lend our nameas supporter to all engagements undertaken in thename of this initiative. The following examples
relate to our activity as the lead or co-lead investor.

16

COLLABORATIVEINITIATIVESRAISING EXPECTATIONSFOR CLIMATE-RELATED LOBBYINGBY CORPORATIONS
We began our work on “Paris-aligned
corporate climate-related lobbying“ in2018 and are witnessing rapid uptake byinstitutional investors – a good sign thatinvestors are coming to grips with the climate crisis and beginning to focus on theimportance of strong public policy and therole that corporations are playing.
The shareholder proposal we drafted
has received six majority votes since wefirst submitted it in 2020 (three of thesemajority votes were achieved by otherinvestors) and is helping to raise the bar
for all companies. One indication of impact
was provided by ISS, a leading proxy advisory firm, which surveyed its clients on its
climate change policies at the end of 2021:
65% of investor respondents listed, as oneof their “minimum“ expectations of companies, reporting to show that “corporate
and trade association lobbying activities
are aligned to (or are not in contradictionwith) limiting global warming in line with
Paris Agreement goals.“ Climate-related
lobbying metrics are now also included in
the CA100+ Net Zero Benchmark.
Our proposal is being used as a template
for two collaborative engagement initiatives in the US, coordinated by Ceres onbehalf of the CA100+ and by the InterfaithCenter on Corporate Responsibility. We arehelping to advise both initiatives.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

COLLABORATIVEINITIATIVES

Context: During 2021 we engaged actively with allof the companies for which we are a lead or co-lead
investor within CA100+ about their net-zero transition plans. Towards the end of 2021, we wrote to five
CA100+ European companies requesting that they disclose specific additional information by the end of theyear where they had not met the Net Zero Benchmark(NZB) standards. This deadline was set because only
disclosures made by that date were to be taken into
account in the March 2022 iteration of the benchmark,being compiled by the Transition Pathway Initiative(TPI). Below are two examples of progress we madewith two companies, one in Europe, one in Asia.

Iberdrola (Spain)
Activity: We continued our dialogue with Iberdrola
throughout the year, focusing on the detail of its transition plan and its governance arrangements relating
to climate change.

PTT Pcl (Thailand)
Activity: We first focused on discussing coal divestment
plans as well as the need to enhance carbon reduction
targets in line with climate scenarios. We then decided
to structure our next engagement on the key themes
and indicators of the CA100+ NZB, in order to provide
a clear set of expectations and focus areas. We helda meeting with PTT Pcl to cover updates to the NZB,
before discussing the need for an accelerated transition
towards net zero emissions.

Outcomes: In early 2021, the company committed tosubmit its climate action plan to shareholders for anadvisory vote. At its AGM, the shareholders approved
the revision of the Articles of Association to place responsibility for the company’s climate strategy on the
Board of Directors. Beginning in 2022, the Board will
also be responsible for approving and producing annual
climate management reports within the Non-Financial
Information Report. The company has established thegoal of achieving net zero by 2050, has set intermediatetargets for reducing direct and indirect emissions andestablished science-based objectives aligned with theParis agreement, aligning its strategy and investment
policy with these objectives. The assignment of the newrole to the Board will be submitted to shareholders foran advisory vote at the 2022 AGM as will the annual
climate management report.

Outcomes: In February 2021, PTT Pcl announced that
it would divest its coal mining business, which brought
the company into line with the expectations we had
shared related to our coal policy. The company alsoenhanced its carbon emissions reduction targets, which
now exceed Thailand’s National Determined Contributions (NDCs) but remain insufficient to align withthe objectives of the Paris Agreement. We expect theincreasing number of net-zero pledges and enhanced
National Determined Contributions taken by countries
in Asia in 2021 to help facilitate progress towards ambitious climate targets in 2022.

CLIMATE-RELATED LOBBYING BY CORPORATIONS
Activity: In 2021, we continued our leadership on the
topic of corporate climate-related lobbying, encouraging companies to align their direct and indirect lobbying efforts to the goals of the Paris Agreement. As an
escalation measure, we filed two shareholder proposals seeking a Board-led evaluation of each company’s
lobbying efforts measured against the temperaturetarget set by the Paris Agreement:

COLLABORATIVEINITIATIVES

Outcomes:• ExxonMobil (US) – 64%: For the second consecutive
year, ExxonMobil sought permission from the Securities & Exchange Commission (SEC) to omit our proposal. In 2021, we successfully defended the proposal
at the SEC and it went on to receive a strong majority
vote at the company’s annual meeting.
• Delta Airlines (US) – 63%: Our proposal received another strong majority vote, after a 46% vote in 2020.
Both ExxonMobil and Delta Airlines are undertaking
the assessment requested and intend to publish
reports in 2022.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

17

COMPANIES’ OPERATIONAL IMPACTS
ON FORESTS AND FRESHWATER

Environmental
Sustainability

rgy
nsitionEnvironmental sustainability:
reducing the negative environmental
impactEqualityof ourinvestments&
Inclusive Growthand stimulating
positive impact
In April 2021, we launched our Roadmap for Biodiversity “Sustainable by Nature” which includes
a dedicated Stewardship section outlining our
high-level expectations of corporations and ourplans to make nature loss a core topic of our corporate engagements. Much of our engagement on
the environmental sustainability theme is driven by

this roadmap, building on our years of engagement
on deforestation. During 2021, we worked with agroup of approximately 10 institutional investors
to develop a collaborative engagement initiative
focused on reversing biodiversity loss.

DEFORESTATION DRIVEN BY SOY PRODUCTION
Activity: Through structured stakeholder engagements,
Ceres helps businesses work with a wide range of
constituency groups to identify challenges, discuss
emerging trends, set goals and targets, develop solutions and then publicly and transparently disclose
their actions. These invitation-only dialogues are held
under Chatham House rules in order to ensure trust
and may continue for years. In 2021, we joined a small
group of investors convened by Ceres to engage in a
focused 12-month dialogue with Bunge (US) about
how to improve its policies and disclosures regarding

deforestation in its soy supply chain. The primary
focus of our dialogue is the Cerrado region of Brazil, asavannah rich in biodiversity that is gradually being
converted to soy and cattle production. This dialoguepresents an important opportunity to improve the practices of a key player in the region with a long-standing
commitment to end deforestation in its supply chain.
Outcomes: We believe our comments were wellreceived by the company and we will continue thediscussions in 2022.

ENVIRONMENTAL IMPACT OF SYSTEMIC PESTICIDES
Activity: We have been engaged in a long-term dialogue with PepsiCo (US) about the use of systemic
pesticides in the company’s global supply chain, andits impact on a range of ecosystems and the organisms
they support.
Outcomes: The discussions have been constructive, resulting in improvements in how the company oversees

18

COLLABORATIVEINITIATIVES

Activity: We engaged directly with nine Asian portfolio companies to stress our focus on biodiversity andencourage them to submit data to CDP Forests and/or Water ahead of the disclosure deadline of the endof July. We did an in-depth review of its sustainability
disclosure and CDP report, and shared potential enhancements to its approach and best practices frominternational peers. The company is committed to the
Science Based Targets initiative (SBTi), and we agreed
that its net zero objective and SBT could be a goodstarting point for engagement with suppliers on eliminating deforestation.

Outcomes: Our meeting with Yum China (China) was
particularly fruitful. The company has committed to
implement a Zero Deforestation Strategy. Three ofthe nine companies started disclosing this year: Yum
China (China), Dabur India (India) and Li Ning (China).
As Asian companies have up to now often focused
mainly on climate risks, it is encouraging to see moreof them expand their focus to include the identification, management and mitigation of deforestation andwater-related risks, including those in their supply
chain. We will continue to press non-disclosing companies and to engage on water security and deforestation
risks during 2022.

THREAT TO THE SURVIVAL OF HORSESHOE CRABS
Activity: Towards the end of 2021, we introduced a
new thematic focus that touches on the intersectionof public health and nature loss – the protection of
the horseshoe crab, an ancient species whose bloodis used for laboratory safety testing. Globally, virtually
every vaccine, injectable drug and medical device
implanted in the human body relies upon a component of horseshoe crab blood to test for “endotoxin”
contamination. These tests are critically important toprotect human health. Horseshoe crab populations,however, are declining due to a range of pressures, including from the biomedical industry. This decline also
threatens other species that depend upon their eggs
for food, like migratory birds. Ultimately, if horseshoe
crab populations cannot be sustained, human health

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

DIRECT
ENGAGEMENT

is at risk. Thankfully, there is a synthetic alternative on
the market that has proven to be just as effective as
horseshoe crab blood.
We wrote to 14 pharmaceutical companies basedin the United States, Europe and Asia, to encouragethem to transition to the widely approved synthetic
alternative.
Outcomes: We aim to secure commitments fromthe companies concerned to phase out the use ofhorseshoe crabs and replace the relevant testing protocols with the synthetic alternative. We will continue
to pursue this engagement during 2022.

DIRECT
ENGAGEMENT

the use of certain particularly harmful pesticides in
its global agricultural supply chain. During the second
part of 2021, the company announced a new firm-widecommitment to regenerative agriculture and reached
out to us for our feedback. We will be expanding thescope of this discussion in 2022 to other companies andindustries with agricultural supply chains in the US.

DIRECT
ENGAGEMENTCOLLABORATIVEINITIATIVESREVISED BUSINESS CALL FOR
A UN TREATY ON PLASTIC POLLUTION
We signed the revised business statement for a Global Treaty on
plastic pollution. It calls on governments to ensure that international negotiations effectively help drive the transition to a circular
economy for plastics globally and at scale. That statement urges UN
member states to establish an Intergovernmental Negotiating Committee at UNEA 5.2 to develop an ambitious international, legallybinding instrument on plastic pollution. This is a natural next stepafter BNPP AM’s endorsement of the New Plastics Economy Global
Commitment, the EPR Statement for packaging extended producer responsibility and the Business Call for a UN treaty on plastic
pollution.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

19

COLLABORATIVEINITIATIVESINVESTOR STATEMENT ON THE BANGLADESH ACCORD ON FIRE AND BUILDING SAFETY

Environmental
Sustainability

Equality &Inclusive Growth

Equality and inclusive growth:promoting a more equitable andsustainable distribution of value toensure the long-term stability andresilience of societies and ecosystems
Investors can play an important role by incorporating a ‘social equity’ bottom line into their investment analysis and practices, and by encouraging
companies to take account of and manage theirlabour and employment practices and impacts well.
Our work in this area is guided by three targets.

First, to ensure that senior corporate management
teams are appropriately incentivised to prioritise
the success and long-term sustainability of theirbusinesses through reform of executive compensation and the mitigation of excessive CEO-to-median
employee pay ratios. Second, to encourage companies to promote all forms of diversity, and provide
greater opportunities for women and minorities, at
all levels of the organisation. Third, to encouragecompanies to adopt more transparent tax strategies.

BOARD DIVERSITY
Activity: Since 2019, our voting policy has contained an
explicit provision on gender diversity. For Europe, North
America, Australia, New Zealand and South Africa, ourthreshold is for there to be at least 30% of women on
corporate boards, and in other regions like Asia and Latin America, 15%. Under certain conditions, we support
boards that have a ratio just below this, for example
if the company has made significant improvements
in recent years or commits to reaching our thresholdwithin two years. In 2021, we continued engaging with

DIRECT
ENGAGEMENTa target list of companies whose performance was
not in line with our new policy and to which we had
important exposure.
Outcomes: Our target list comprised 36 companies(14 in Europe, 11 in North America and 11 in Asia) heldin our active portfolios. We contacted them to explain
our new voting policy and ask for a discussion. We had
a 36% success rate overall, with 13 companies adoptingchanges in line with our voting policy.

POSITIVE OUTCOME

13

36%

We managed to achieve a positive outcome with improvement of gender
diversity and therefore a vote in favour of board elections.

PENDING OUTCOME

5

14%

We have pending cases where we had some positive feedback and will continue
the engagement in 2022.

NEGATIVE OUTCOME

18

50%

We had a negative outcome and so were opposed to board election, either due tolack of improvement on diversity or other reasons, like lack of independence.

In April 2021, we signed an investor statement to express
support for renewal of the Bangladesh Accord on Fireand Building Safety, created in the wake of the tragic
Rana Plaza factory collapse in 2013. We also supported
the original 2013 Investor Statement following the Rana
Plaza disaster that led to the establishment of the Accord.
We are pleased to report that the Accord has beenrenewed (effective September 2021) and expanded for
two years as the International Accord for Health and

Safety in the Textile and Garment Industry. Like its predecessor agreement, the new International Accord is alegally binding agreement between companies and tradeunions that aims to make ready-made garment (RMG)
and textile factories safe. The new Accord aims to expand
these safety standards and worker protections to othercountries and labour markets based on the Bangladesh
Accord model.

ENGAGEMENT LINKED
TO ESG PERFORMANCE
As well as engaging with issuers in relation to voting
and the priority 3E topics, we also engage with companies in support of our ESG integration across ourinvestment portfolios. This dialogue targets priority
companies identified for their poor ESG performanceagainst internal or international ESG standards,
including the UN Global Compact Principles andthe OECD Guidelines for Multinational Enterprises(OECD MNEs Guidelines). Our ESG Integration
Guidelines are available on our website.
BNPP AM expects companies:• To meet their fundamental obligations in humanand labour rights, protection of the environment
and ensuring anti-corruption safeguards wherever
they operate, in accordance with the UN Global
Compact Principles and OECD MNEs Guidelines.
• To comply with a series of Sector Policies (e.g. coal
policy) established to set out the conditions forinvesting in particular sensitive sectors.

BNPP AM either engages with or excludes companies that are subject to serious controversies, as
set out in its Responsible Business Conduct (RBC)
policy. In 2021, we engaged with several companies
on this basis. Engagement with three companies
did not lead to enough progress and we decided to
exclude them from our portfolios as an escalation
measure.
Further, we avoid investing through active portfolios
in entities with a low ESG rating, without actively
engaging or planning to actively engage with themin the near future. In relation to our passive investments, where the RBC policy cannot be fully applied,
we manage ESG risks through active corporate
engagement and voting. As a last resort, we may
divest entities with the worst ratings if they do notrespond to engagement and demonstrate that they
intend to place greater emphasis on sustainability
in future.

• To maintain good ESG performance in order tomitigate ESG risks across portfolios.

HEALTH AND SAFETY
Activity: Several of our engagements covered worker
health and safety issues, including an in-person meeting at the headquarters of Amazon (US) in Seattle
to update investors on a range of topics, from worker
safety issues and human rights to packaging andArtificial Intelligence. Earlier in the year, we raised
concerns about the company’s response to a widely
publicised union-organising effort in Alabama. We
also signed investor letters to Hilton Worldwide, Park
Hotels & Resorts (US) and Xenia Hotels & Resorts (US)20

DIRECT
ENGAGEMENT

to encourage the incorporation of indicators of worker
well-being into executive compensation. Our continuingengagement with Pemex (Mexico), the state oil company, focuses on the company’s concerning record ofserious industrial accidents, as well as its response to
the COVID-19 pandemic.
Outcomes: We will keep monitoring the implementation of better health and safety standards at thesecompanies.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

HEALTH AND SAFETY /UN GLOBAL COMPACT PRINCIPLE 1
Activity: In 2021, we engaged with Atlantia (Italy) overthe controversies surrounding safety in relation to its
88%-owned subsidiary, Autostrade per l’Italia. A bridge
managed by the company collapsed, which led to thedeaths of at least 43 people in 2018. Warnings about
the bridge’s safety had been raised for several years
by experts in Parliament, as well as by industry andacademic experts. We considered the company at riskof violating Principle 1 of the UN Global Compact.

DIRECT
ENGAGEMENT

Outcomes: The company held a general meeting anddecided to sell Autostrade to CDC Italia (following asettlement signed with the authority in 2020). Liabilities associated with the incident will not be carried
by Atlantia. As the deal will remove liability for theincident from shareholders, and in light of the settlement, we decided not to exclude the company fromour portfolios.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

21

COAL-FIRED POWER GENERATION /COAL SECTOR POLICY
Activity: We initiated our engagement with CLP Holdings (Hong Kong) in our co-lead role within the Asia
Investor Group on Climate Change (AIGCC) Asian utilities engagement program because we believed thecompany may be in breach of our Coal Policy.
Outcomes: Our engagement with CLP Holdings wasparticularly fruitful. It is a power utility with businesses
across the Asia-Pacific region, operating several coalfired power generation assets. We have been actively
engaging with the company since 2019. During Q3,
as CLP was working on new climate targets for Board
approval, we held no fewer than four meetings withthe company’s sustainability, investor relations andboard representatives responsible for climate issues.
Among our asks of the company was a clear initial
focus on committing to net zero by 2050 and coal exit
by 2040 for non-OECD operations. In September 2021,
CLP Holdings announced its commitment to net-zeroemissions by 2050 and coal exit by 2040, setting newscience-based targets to align with the goal of limiting
global warming to well below 2°C. The company alsoannounced its ambition to further strengthen its approach to align with 1.5°C, demonstrating leadershipin the transition away from coal and towards net zero
power generation. Following those announcements we
decided that the company would remain eligible forinvestment and to continue our engagement via AIGCC.

ENGAGEMENT WITH FIXED INCOMEASSET ISSUERS
Thematic bond issuers

37

engagementswith thematicbond issuers
during 2021

We aim to participate in ex-ante (prior-issuance)
investor meetings with thematic bond issuers.
These investor calls could be during the specific bond’s roadshow, or a “non-deal roadshow”
where issuers sound out investors’ comments andexpectations. During these ex-ante meetings, we
aim to accomplish either or both of two objectives:
gather more information that is not yet expressedin documentation to help us form a more complete
assessment of the (potential) thematic bond; andencourage improvements in the structure of thethematic bond that could lead to greener assets
being selected, or dropping of less desirable assets
from the portfolio.
– An example of information discovery was confirming with a particular issuer that they intended
to allocate 100% of proceeds raised to acquire
renewable power purchase agreements rather
than to capital expenditures to improve theenergy efficiency of their buildings (also eligible
under their framework). Given this information,
we formed a negative view of the bond, since operating expenditures that do not prolong the usefullife of a green asset are not considered valid under
the EU Green Bond Standard.
– An example of encouraging improvement wasproviding an opinion to an issuer that loans tohydroelectric facilities larger than 20MW would
not meet the EU’s “Do No Significant Harm”

22

COLLABORATIVEINITIATIVES

principles and would therefore not likely beconsidered to substantially contribute to climate
mitigation. We explained the reasoning behind
this and our firm’s position. The issuer said that
it would consider our view in its future issuances.

Sovereign issuers
Similarly, we engage in dialogue with sovereign
bond issuers about the terms of their bonds andtheir countries’ policies and performance on key
ESG issues, which might influence their ability toservice their debts. We had such dialogues withrepresentatives of several governments in 2021,
including those of the UK, Spain and Chile. The
following is one example of this activity.

GREEN BOND IN CHILE
In 2021, we engaged with the Public Debt
Office and Ministry of Finance of Chile,
to provide feedback on a Green Bondframework issuance proposed in relation to
Chile’s sustainable development strategy.
This issuance aims to be a critical tool
to meet Chile’s 30% CO 2 reduction perunit of GDP by 2030 set under the Paris
Agreement, which the country signed in2017. It follows a paradigm shift in the life
cycle management of public works andaligns with the recently approved Climate
Change Mitigation and Adaptation Planfor Infrastructure Services. We focused inparticular on the alignment of the use ofproceeds with the country’s environmental
policies.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

PUBLIC POLICYADVOCACY
We have a long-standing commitment to public
policy engagement to advance sustainability goals,
contribute to a well-functioning financial system
and mitigate systemic risks. We actively engage
with policymakers, helping them to shape the markets in which we invest and the rules that guide andgovern company behaviour. We have constructively
and effectively engaged with policymakers overmany years, often at their request, with a particularfocus on corporate disclosure, climate policy andcorporate governance.
We view public policy engagement as integral to thefulfilment of our fiduciary duties to our clients andto our commitment to the Principles for Responsible
Investment, which recommend participation “in thedevelopment of policy, regulation and standard setting (such as promoting and protecting shareholder
rights).” Our Public Policy Stewardship strategy isavailable on our website.
Our public policy efforts include a variety of
approaches, including:• Public submissions to legislators, regulators andmultilateral institutions (e.g., responding to public
consultations).
• Participation in the development of policy proposals in public and private forums, such as technical advisory committees and investor associations.
• Meetings with policymakers.
• Publication of white papers and endorsements ofpublic statements and commitments.
We may conduct public policy engagements individually, but whenever possible we favour engagements that are taken in partnership with otherinvestors, in formal or informal networks.

INTERNATIONALINDEPENDENT OVERSIGHT
COMMITTEE OF THE BESTPRACTICE PRINCIPLES GROUP
The Best Practice Principles Group (BPPG) comprises all major proxy advisor firms and was formed
to promote greater understanding of the corporate
governance and ESG research and support services
provided to professional investors. This framework
was instigated by European Securities and Markets
Authority, which opted for monitored self-regulation
as a remedial approach. The Independent OversightCommittee (IOC), comprising investors, corporation
representatives and experts, scrutinizes proxy firm
reporting against agreed principles, addresses
complaints, presses for improvement and convenes
open stakeholder forums on the industry. Our Global
Head of Stewardship is a member of the IOC.
The annual report of the IOC was published earlyin the year, and its focus during this first year waslargely on developing constitutional and procedural precedents for the future, monitored throughindependent annual assessments of how well proxyadvisory services meet best practices. Late 2021,
IOC sponsored a stakeholder survey together witha virtual open forum to gather market opinion on
the industry and the efficacy, applicability and suitability of the Best Practice Principles. In Novemberin the US, the Securities & Exchange Commission
reversed restrictions on proxy advisors and proposed amendments to the Federal proxy rules
governing proxy voting advice, in light of proxy firm
adherence to an industry code of best practices andthe oversight of the IOC.

In this section, we present selected examples ofour public policy engagements at the international,
regional and national levels.

The above-mentioned securities are for illustrative purposes only, they are not intended as solicitation of the purchase of such securities, and do not constitute any investment advice or recommendation.

23

GLOBAL INVESTOR STATEMENTTO GOVERNMENTS ON THE CLIMATECRISISWe signed this statement, led by Investor Agenda, toencourage all countries to significantly strengthen
their Nationally Determined Contributions (NDCs)
under the Paris Agreement in relation to 2030, andto ensure a planned transition to net-zero emissions
by 2050 or sooner. This statement asks governments
to commit to a domestic mid-century net-zeroemissions target and to outline a pathway with
ambitious interim targets, including clear sectoral
decarbonisation roadmaps. It directs them to implement domestic policies to deliver these targets,
incentivise private investments in zero-emissions
solutions and ensure ambitious pre-2030 action. We
also asked governments to ensure that COVID-19
economic recovery plans support the transition to
net-zero emissions and enhance resilience (whichis consistent with the green recovery plan), and tocommit to implementing mandatory climate risk
disclosure requirements aligned with the Taskforce
on Climate-related Financial Disclosures (TCFD).

24

COLLABORATIVEINITIATIVESINVESTOR STATEMENT ISSUEDAHEAD OF COP15 ON BIODIVERSITY
We endorsed an investor call to global leadersduring the 15th meeting of the Conference of theParties (COP15) to support the establishment of an
ambitious and transformational post-2020 Global
Biodiversity Framework (GBF). We welcomed thevision of “living in harmony with nature by 2050”
through the recovery of natural ecosystems with
net improvements by 2050. The statement calls on
governments to agree to the following: an ambitious
and transformational post-2020 GBF that requires
the alignment of financial flows with global biodiversity goals and strengthens national biodiversity
strategy and action plans (NBSAPs) to ensure
successful implementation of the GBF; enforce
domestic policies to deliver biodiversity targets;
establish a regulatory environment that enables
financial institutions to address biodiversity-relatedrisks and opportunities, including consistent anddecision-useful corporate disclosure; and remove all
harmful subsidies and reverse them into subsidiesaligned to bring about change in the real economy
and reduce market failures. The statement was
ultimately endorsed by 78 financial institutions
managing more than US$10 trillion. Our role wasto help convince Ceres to issue the statement,
co-author the Finance for Biodiversity Foundationand provide comments and edits to the final text.

AMERICASEUROPE

U.S. SECURITIES & EXCHANGE
COMMISSION (SEC): MANDATORYCORPORATE CLIMATE CHANGEDISCLOSURESWe participate actively within trade associations
through their dedicated committees and working
groups on sustainable finance and stewardship.
We have long-established memberships in manynational associations such as AFG (France), ALFI(Luxembourg), BEAMA (Belgium) and Assogestioni(Italy), and also at the European level in EFAMA
and AMIC. The key topics in recent months haveembraced the SFDR, the Taxonomy Regulation andthe sustainable preferences under MiFID 2.

In 2021, the SEC worked to issue new rules that, forthe first time, will require publicly traded corporations to disclose information related to climatechange. We participated in three calls with the SEC
to discuss corporate climate change disclosures – aone-on-one call with the interim Director of Corporation Finance and two group “listening sessions”
with Gary Gensler, the SEC Chair, during which
we presented our views on climate disclosure andfinancial materiality.
In close coordination with BNPP AM, the BNP Paribas
Group sent a letter to the SEC supporting mandatory “TCFD +” reporting, including scope 1, 2, and3 corporate emissions disclosures, as well as anumber of other recommendations.

More recently we became a member of Finance forTomorrow (F4T), the initiative launched by Paris
Europlace and the financial institutions of the Placede Paris to promote sustainable finance in France
and build a strong ecosystem to facilitate international cooperation. Through this new membership,
we can contribute to discussions between public,
private and institutional players.

EU SUSTAINABLE CORPORATE
GOVERNANCE CONSULTATION
We responded to the EU Sustainable Corporate
Governance consultation by contributing to theformal responses of several organisations of which
we are a member (including AFG, EFAMA and ICGN).
We applaud the EU for its global leadership in
promoting sustainable finance as a matter of good
corporate governance and investor stewardship.
Given the great diversity of listed companies, weurged a soft-law approach and noted the importance of dialogue between investors and listedcompanies. We also highlighted to the commissionthat the EY study that served as background forthe consultation was the subject of severe criticism
by several credible academic commentators citing
inappropriate evidence, biased use of research andother factors, and expressed our concern that the
EU is considering regulatory changes based on
insufficient evidence.

25

PARTICIPATION IN ADDITIONAL REGULATORY
AND MARKET-SHAPING INITIATIVESLEGAL HIGH COMMITTEE FORFINANCIAL MARKETS OF PARIS (HCJP):WORKING GROUP ON ADAPTINGAPPROACHES TO GOVERNANCEIN FRANCE
We participated in a working group that will propose
legal reforms in relation to adapting corporate
governance in times of crisis. This follows the
exceptional measures adopted by many companies
in response to the COVID-19 pandemic. Similar
circumstances may well arise in the future, requiring the adoption of such exceptional measuresonce again. Thus, the focus of the report developedby the working group was the digitalisation ofcommunication. The working group modified thetext of the Commercial Code in respect of certain
measures related to the functioning of governancebodies, boards of directors and supervisory boards.
We also backed the idea of hybrid AGMs and statedour view that investors should have the same rights
whether they vote remotely or directly at the AGM.
Investors clearly prefer hybrid meetings to virtual-only, because they confer many of the benefitsof virtual-only meetings while avoiding many of theshortcomings.

We engage with policymakers, regulators and othermarket participants in various market-shaping
initiatives to better align regulations and policies
related to the functioning of financial markets,
corporate governance and other topics related tothe 3Es.

APAC
HONG KONG SECURITIES AND
FUTURES COMMISSION (HK SFC):ESG FUND RULES AND
MANAGEMENT AND DISCLOSURE
OF CLIMATE-RELATED RISKSBY FUND MANAGERS
As members of the HK SFC Technical Expert Groupon climate-related risks, we participated in two
calls on April 8 and May 20, 2021 with the HK SFC
Investment Product Division to discuss enhancements to its 2019 Circular on green or ESG funds.
This was in response to local and international
market and regulatory developments such as theSustainable Finance Disclosure Regulation (SFDR)
in Europe.
Following its soft consultation process, on June 29
the HK SFC issued the “Circular to managementcompanies of SFC-authorised unit trusts and mutual
funds – ESG funds.” The circular refines some of
the requirements for SFC-authorised ESG funds,
defined as funds incorporating ESG factors as their
key investment focus and reflecting them in theirinvestment objective or strategy.
After releasing its updated circular on ESG funds inJune, in August the HK SFC issued the conclusions of
its consultation on the Management and Disclosureof Climate-related Risks by Fund Managers. This is
another regulation we contributed to through ourmembership in the SFC’s Technical Expert Group.
The SFC will amend the Fund Manager Code of
Conduct (FMCC) to require fund managers to takeclimate-related risks into consideration across theirgovernance, investment management, risk management and disclosures.

BNPP AM has a long-term commitment to, andsuccessful track record of, public policy engagement to advance its sustainability goals.

Our 2021 memberships and pledges
SUPPORTER
SINCE

ENERGY
TRANSITION

Asia Investor Group on Climate Change (AIGCC)
Association Française de la Gestion financière (AFG)
CDP
Ceres
Council of Institutional Investors (CII)
European Fund and Asset Management Association (EFAMA)
Eumedion
Farm Animal Investment Risk and Return Initiative (FAIRR)
Forum pour l’Investissement Responsable (FIR)
Global Network Initiative (GNI)International Corporate Governance Network (ICGN)
Institutional Investors Group on Climate Change (IIGCC)
Partnership for Biodiversity Accounting Financials (PBAF)
UN Environment Program Finance Initiative (UNEP-FI)
INVESTOR STATEMENTS AND OTHER INITIATIVES
Align (European Commission, WCMC Europe, Capitals Coalition, Arcadis, ICF,
UNEP-WCMC)
Business Call for a UN Plastics Treaty
Climate Action 100+
Financial Institution Statement ahead of the Convention on Biological Diversity
COP15 (Ceres/Finance for Biodiversity Foundation)
GNI Principles on Freedom of Expression and Privacy (GNI)
Global Investor Statement to Governments on the Climate Crisis (Investor
Agenda)Global Investor Statement in Support of an Effective, Fair and Equitable Global
Response to COVID-19 (Access to Medicine Index)
Global Investor Statement on Farm Animal Welfare (Business Benchmark for
Farm Animal Welfare)Green Bond Principles (International Capital Markets Association)
Hong Kong Principles of Responsible Ownership (Hong Kong Securities andFutures Commission)
Inevitable Policy Response (PRI)
Investor Agenda (AIGCC, CDP, Ceres, IICC, IIGCC, UNPRI, UNEP-FI)
Investor Expectations on Deforestation in Soybean Supply Chains (PRI, Ceres)
Investor Expectations on Deforestation in Cattle Supply chains (PRI, Ceres)
Investor Expectations on Corporate Lobbying on Climate Change (IIGCC, AP7,
CEPB, PRI)
Investor Expectations on Nutrition, Diets and Health (Access to Nutrition
Initiative)
Investor Position Statement on Corporate Net Zero Transition Plans (IIGCC)
Investor Statement (Access to Medicine Index)
Investor Statement on the Bangladesh Accord on Fire and Building Safety (ICCR)
Investor Statement (FAIRR)
Investor Statement on Forced Labour in Global Supply Chains (Know The Chain,
Investor Alliance for Human Rights)
Malaysian Code for Institutional Investors (Securities Commission Malaysia)
Methane risk in oil & gas sector (PRI)
Montréal Carbon Pledge (PRI, UNEP-FI)
Net Zero Asset Managers initiative
New Plastics Economy Global Commitment (Ellen McArthur Foundation, UNEP)
Operating principles for impact management (International Finance Corporation)

2018
10+ years
2012
2019
2018
10+ years
2018
2021
10+ years
2018
10+ years
10+ years
2021
10+ years

X

Principles for Responsible Investment (PRI)

Founding
Member2018

MEMBERSHIPSSPOTT Palm oil, Timber, Pulp and Paper (Zoological Society of London)
Statement of Support for Extended Producer Responsibility Schemes for Packaging(Ellen Macarthur Foundation)
Task Force on Climate-related Financial Disclosures
Tobacco-Free Finance Pledge (Tobacco Free Portfolios)
Transition Pathway Initiative26

We advocate both to strengthen ESG considerations
within the financial sector and, more broadly, toimprove sustainability-related regulation for themarkets in which we invest. We actively engage policymakers, helping to shape the markets in which
we invest and the rules that guide and govern company behaviour. Public policy can affect the ability oflong-term investors to generate sustainable returns
and create value. It can also affect the sustainability
and stability of financial markets, as well as social,environmental and economic systems.

X
X

X

X
X
X
X

X
X

X
X
X
X

X
X

2018

X
X

2021

X

2016
2017

X
X

X

2019

X

2021
2018
2019
2019

X
X

2018

X

X
X

2014
2021
2016
2014
2021

X
X
X
X
X

2019

X

2019
2017
2015
2021
2018

X
X
X

2019

X

X

X
X

X
X

X

2021
2017
2018
2018

OTHER

X
X
X

2021

2021

EQUALITY AND
INCLUSIVEGROWTH

X
X
X

2021
2021
2017

ENVIRONMENTALSUSTAINABILITY

X
X
X
X

27

BNP PARIBAS ASSET MANAGEMENT France, “the investment management company,” is a simplified joint stock company with its
registered office at 1 boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832, registered with the “Autorité des marchés
financiers” under number GP 96002.
This material is issued and has been prepared by the investment management company.
This material is produced for information purposes only and does not constitute:
1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract
or commitment whatsoever
2. investment advice.
This material makes reference to certain financial instruments authorised and regulated in their jurisdiction(s) of incorporation.
No action has been taken which would permit the public offering of the financial instrument(s) in any other jurisdiction, except as
indicated in the most recent prospectus and the Key Investor Information Document (KIID) of the relevant financial instrument(s)where such action would be required, in particular, in the United States, to US persons (as such term is defined in Regulation Sof the United States Securities Act of 1933). Prior to any subscription in a country in which such financial instrument(s) is/
are registered, investors should verify any legal constraints or restrictions there may be in connection with the subscription,purchase, possession or sale of the financial instrument(s).
Investors considering subscribing to the financial instrument(s) should read carefully the most recent prospectus and Key
Investor Information Document (KIID) and consult the financial instrument(s’) most recent financial reports. These documents
are available on the website.
Opinions included in this material constitute the judgement of the investment management company at the time specified
and may be subject to change without notice. The investment management company is not obliged to update or alter the
information or opinions contained within this material. Investors should consult their own legal and tax advisors in respectof legal, accounting, domicile and tax advice prior to investing in the financial instrument(s) in order to make an independent
determination of the suitability and consequences of an investment therein, if permitted. Please note that different typesof investments, if contained within this material, involve varying degrees of risk and there can be no assurance that any specificinvestment may either be suitable, appropriate or profitable for an investor’s investment portfolio.
Given the economic and market risks, there can be no assurance that the financial instrument(s) will achieve its/their investment
objectives. Returns may be affected by, amongst other things, investment strategies or objectives of the financial instrument(s)and material market and economic conditions, including interest rates, market terms and general market conditions.
The different strategies applied to financial instruments may have a significant effect on the results presented in this material.
Past performance is not a guide to future performance and the value of the investments in financial instrument(s) may
go down as well as up. Investors may not get back the amount they originally invested.
The performance data, as applicable, reflected in this material, do not take into account the commissions, costs incurredon the issue and redemption and taxes.

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The sustainable
investor for achanging world

April 2022 - BNP Paribas Asset Management - Brand & Communication Department / TBWA\Corporate / All rights reserved / Illustrations: Alice Yun Zhu / Copyright: Thibault Stipal, Michael Blann, Studio Thisthisthis HK, Studio 20twelve KL, Guillaume Blanchon