Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity
• Governance

Environmental Achievements

• Reduced portfolio's direct GHG intensity to 8% of its comparative index (MSCI ACWI), significantly lower than Paris-aligned indices.

Social Achievements

• Engaged with Amazon to improve disclosures on social practices, resulting in the disclosure of injury rates.

Governance Achievements

• Engaged with Abiomed to challenge proposed changes to executive pay plan, resulting in a strong oppose vote at the AGM.

Climate Goals & Targets

Environmental Challenges

• Low percentage of portfolio holdings reporting direct emissions and having emissions reduction targets.
• Portfolio lags the market in female board representation.
• Challenges in carbon accounting for avoided emissions (e.g., Zoom).

Mitigation Strategies

• Ongoing company engagement to encourage emissions reporting and target adoption.
• Engagement with companies to improve board diversity.
• Continued engagement with companies to improve data collection and reporting methodologies.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Energy transition investment opportunities.

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• People
• Planet
• Prosperity

Environmental Achievements

• The portion of the portfolio aligned with an accredited science-based 1.5C target has doubled from 19 to 38 per cent.

Social Achievements

• Met with 21 holdings to build understanding or influence change.

Governance Achievements

• Voted our clients’ shares on 840 resolutions at company annual general meetings (AGMs). On 36 occasions, we voted against management’s recommendation, and we supported a shareholder resolution 14 times.

Climate Goals & Targets

Environmental Challenges

• A lack of leadership on environmental matters in some portfolio holdings.
• Employee welfare concerns in some companies.
• Governance or succession planning issues in some companies.

Mitigation Strategies

• Engagement with portfolio companies to address these issues.
• Proxy voting to influence corporate decision-making.
• Selling holdings of companies where sustainability concerns could not be resolved.

Supply Chain Management

Responsible Procurement

• Ethical sourcing standards (e.g., Starbucks)

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Working Conditions
• Executive Remuneration
• Board Composition
• Human Rights
• Biodiversity
• Supply Chain Sustainability

Environmental Achievements

• Improved emissions reporting across 89% of portfolio holdings by the end of 2023 (up from 67% at the start of the year).
• Positive progress on climate alignment with several holdings, including improved disclosures at Ginkgo Bioworks, NIO, Sea, and Meituan.
• CATL's advancement from 'lagging' to 'leading' in climate alignment after setting carbon neutrality targets.

Social Achievements

• Amazon significantly improved transparency with its first annual Safety, Health and Well-being Report in 2022, demonstrating a rapidly dropping injury rate.
• Amazon's career choice training program has enrolled 150,000 employees.
• Engagement with companies on improving working conditions and labor practices.

Governance Achievements

• Engagement with companies on improving executive remuneration structures to better align with long-term value creation.
• Engagement with companies on improving board composition to enhance independence and expertise.
• Increased transparency and public disclosures on user data awareness and privacy at Tencent.

Climate Goals & Targets

Environmental Challenges

• Data gaps and inconsistencies in ESG data.
• Slow progress on climate targets for some holdings (e.g., Adyen, Cloudflare).
• Amazon's decision to step back from the SBTi.
• Amazon's narrow Scope 3 emissions boundary.
• Human rights concerns related to Tencent and its operations in Xinjiang.

Mitigation Strategies

• Formation of a dedicated ESG Data team to improve data quality and analysis.
• Ongoing engagement with companies to improve their climate targets and disclosures.
• Direct engagement with Amazon to encourage expansion of its Scope 3 emissions boundary.
• Commissioned a study by Professor Jack Donnelly to assist in assessing complex human rights cases.
• Ongoing engagement with Tencent to improve transparency on user data awareness and privacy.

Supply Chain Management

Responsible Procurement

• Engagement with suppliers to encourage sustainability practices.

Climate-Related Risks & Opportunities

Physical Risks

• Business and/or supply chain disruption

Transition Risks

• Environmental regulation and taxation
• Resource availability
• Changing customer expectations

Opportunities

• New products and services
• Growth into new geographies

Reporting Standards

Frameworks Used: Science Based Targets initiative (SBTi), Task Force on Climate-Related Financial Disclosures (TCFD), United Nations Global Compact (UNGC)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Carbon intensity of the portfolio was 71% lower than the benchmark (FTSE World Index) based on 81% of the equity portfolio reporting on carbon emissions. Based on reported and estimated Scope 1, 2 & 3 WACI by Revenue, covering 93% of the portfolio, carbon intensity was 61% lower than the benchmark index.

Social Achievements

• Not disclosed

Governance Achievements

• Appointed Randeep Grewal and Stacey Parrinder-Johnson as Directors, bringing diverse investment industry experience.

Climate Goals & Targets

Environmental Challenges

• Underperformance of the portfolio compared to the FTSE World Index in the first half of the year, due in part to underperformance in insurance and healthcare holdings.
• Lingering effects of the pandemic on the Chinese economy.
• Challenging funding environment for drug developers.

Mitigation Strategies

• Actively repositioning the portfolio, focusing on valuation discipline.
• Sold positions in Ping An and Prudential.
• Sold Novocure due to setbacks in clinical trials.
• Continued to invest in companies benefiting from structural trends (digital payments, semiconductors, healthcare, infrastructure).

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed