Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Environmental (E)
• Social (S)
• Climate Change
• Supply Chain Management
• Resource Efficiency
• Human Capital Management
• Diversity, Equity and Inclusion

Environmental Achievements

• Improved ESG quality scores across all funds during 2021 (using MSCI methodology)
• Launched an annual Engagement Plan to enhance company engagement and highlight material ESG issues
• Subscribed to a carbon footprint service, calculating CAM’s business footprint (ex-portfolios), enabling the development of a mitigation strategy
• Contributed to the CDP's SME Climate Disclosure Framework

Social Achievements

• Increased company interactions to monitor risk and enhance company prospects
• Addressed Covid-19 impacts in internal discussions and company interactions, particularly supply chain issues and inflationary pressures
• Discussed dividend suspensions and policy with all fund holdings
• Highlighted resource efficiency and human capital management in company interactions where material
• Proactive discussions on Diversity, Equity and Inclusion

Governance Achievements

• Reviewed governance, maintaining a flat organizational structure and adding a non-executive director to the Board
• Became a signatory to the UN PRI
• Improved alignment of stewardship activities with the revised UK Stewardship Code 2020
• Instigated an annual program of director-sponsored culture meetings
• Established an ESG working group to focus on aspects of responsible business

Climate Goals & Targets

Environmental Challenges

• Information gaps and valuation anomalies in small and mid-sized companies, particularly regarding ESG issues
• Supply chain disruptions due to Covid-19 and Brexit
• Resource constraints and talent recruitment and retention challenges for small and mid-sized companies
• Accelerated change trajectories related to climate change, biodiversity loss, plastics pollution, and changing market expectations
• Inconsistent ESG ratings from third-party providers for small and mid-sized companies

Mitigation Strategies

• Developed a proprietary system for ESG data collection
• Offered support to smallest companies in developing improved ESG reporting
• Increased company interactions and written engagements
• Prioritized Covid-19 impacts in discussions and interactions
• Used new signatory and investor group participation to support the needs of small and mid-sized companies
• Established an ESG working group
• Developed dynamic diagrams to summarize ESG questionnaire fields and communicate improvements over time
• Used in-house analysis for voting decisions, rather than third-party advice

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Changes in government subsidies for renewable energy sources

Opportunities

• Investment in energy transition companies

Reporting Standards

Frameworks Used: UK Stewardship Code

Environmental Metrics

ESG Focus Areas

• Climate change
• Diversity, equity, and inclusion
• Sustainable business practices
• Energy efficiency
• Talent management
• Executive remuneration
• ESG risk management
• ESG reporting

Climate Goals & Targets

Environmental Challenges

• Political and economic uncertainty
• Inflation
• Energy costs
• Recessionary fears
• Deglobalisation pressures
• Greenwashing

Mitigation Strategies

• Engagement with companies on ESG management and reporting
• Development of ESG capabilities
• Setting ESG expectations for investee companies
• Participation in collaborative engagements
• Advocating for improved ESG disclosures
• Voting against resolutions that diverge from responsible investing principles

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Policy Governance and Strategy
• Direct - Listed equity - Active fundamental
• Confidence building measures
• Climate Change
• Stewardship

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI

Environmental Metrics

ESG Focus Areas

• Climate change
• Human rights
• Diversity, equity, and inclusion
• Nature restoration and protection
• Executive remuneration including ESG targets

Climate Goals & Targets

Environmental Challenges

• UK government announcements delaying Net Zero commitments (e.g., ban on petrol/diesel cars, phaseout of gas boilers, energy efficiency rules)

Mitigation Strategies

• Conversations with potentially impacted company holdings to understand the impact of policy changes

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UN PRI, UK Stewardship Code

Environmental Metrics

ESG Focus Areas

• Climate change management
• Diversity, equity, and inclusion (DEI)
• Executive remuneration linked to ESG targets
• Biodiversity considerations
• Responsible use of Artificial Intelligence (AI)

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Poor ESG reporting by small and medium-sized companies, leading to valuation anomalies and hindering sustainable business practices.
• Lack of awareness and adoption of ESG management and reporting standards and frameworks among investee companies.
• Rapid adoption of networked new technologies (AI) with potential risks related to responsible design, development, and use.

Mitigation Strategies

• Annual engagement plan to encourage improved ESG management and reporting.
• Targeted discussions on ESG issues during company engagement meetings.
• Updated ESG questionnaires and engagement surveys to gather data and monitor progress.
• Collaborative work with regulators and signatory bodies to address systemic risks.
• Inclusion of AI governance, strategy, and policy development questions in ESG questionnaires.

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

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Executive Remuneration
• ESG Management and Reporting
• Sustainable Business Practices
• Climate Change (Net Zero)
• Supply Chain Issues
• Water Efficiency
• Waste Management
• Energy Efficiency
• Decarbonisation

Environmental Achievements

• Bodycote's Net Zero target validated by SBTi
• Amorepacific's Group Net Zero target validated by SBTi
• Bodycote demonstrates comprehensive adherence to internationally recognised ESG standards and reporting frameworks

Social Achievements

• Participation in IIMI-sponsored events supporting Women and Girls careers in financial services

Governance Achievements

• Submission of UK Stewardship Code Report 2023 for review by the Financial Reporting Council
• Engagement with remuneration committees regarding executive remuneration
• Advocating for the inclusion of meaningful ESG targets within executive remuneration packages

Climate Goals & Targets

Environmental Challenges

• Absence of reported waste intensity metrics at Bodycote despite adherence to a policy and control standard
• Limiting sustainability reporting to the Group entity rather than providing a report for separately listed Amorepacific entities
• Lack of transparency in ESG ratings, particularly inappropriate use of estimated data
• ESG rating bias impacting investment in small and medium-sized companies

Mitigation Strategies

• Engaging with Bodycote's Chief Sustainability Officer and Head of Strategy to improve transparency on waste intensity metrics
• Engaging with Amorepacific management to improve sustainability reporting for both Group and Corporation entities
• Participating in consultations with HMT and PRI to address lack of transparency in ESG ratings
• Advocating for regulation to address ESG rating anomalies

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Science Based Targets initiative (SBTi)