FSC Standard 23: Principles of Internal Governance and Asset Stewardship

Wellington Management1 manages our business in Australia and New Zealand through Wellington Management Australia Pty Ltd (WM Australia). WM Australia is an Australian proprietary limited company. WM Australia is an indirect subsidiary of Wellington Management Group LLP and is authorized to provide investment management services in Australia under an Australian Financial Services Licence.

ORGANISATIONAL AND INVESTMENT APPROACH

1. A DESCRIPTION OF THE DISTINGUISHING FEATURES OF THE ASSET MANAGER AND HOW THESE FEATURES ARE DIRECTED TOWARDS ACHIEVING CLIENT OBJECTIVES

Wellington Management offers comprehensive investment management capabilities that span nearly all segments of the global capital markets. Our only business is investment management, and our mission is to exceed the investment objectives and service expectations of our clients worldwide.

Wellington Management combines the resources of a large, global, diversified multi-asset manager with the small-company feel of an independent, privately held partnership. We believe this combination serves our clients well. First, our scale and broad capabilities allow us to address a wide range of investment needs and foster innovative solutions. Second, our ownership model aligns our interests with those of our clients and enables a longer-term perspective on our business.

Most importantly, the glue that holds all of this together is our culture. We believe our collaborative culture is the sustainable competitive advantage of our firm, helping us to attract, retain, develop, and motivate talented, dedicated people. Our shared values include integrity, collegiality, learning, humility, respect for diversity of thought, and an unyielding focus on our clients. We are guided by the mantra, “client, firm, self,” and the result is a firmwide mandate to put forth our best efforts on behalf of our clients every day.

2. AN EXPLANATION OF HOW THE ASSET MANAGER ALIGNS ITS PURPOSE AND VALUES WITH ITS DUTY TO CLIENTS

Clients are the reason that our firm exists, and are at the heart of everything we do. This is evident in the clarity of our mission — to exceed the investment objectives and service expectations of our clients worldwide — and in the strengths we bring to bear in pursuing that mission:

LONG-TERM PERSPECTIVE OF A PARTNERSHIP STRUCTURE
Our private ownership model provides stability, allows us to focus on long-term results, aligns our interests with those of our clients, and helps us to recruit and retain outstanding talent.

SINGULAR FOCUS ON INVESTMENT MANAGEMENT
Our only business is managing money for our clients, allowing us to concentrate on our goal of exceeding their investment and service expectations.

EMPOWERED INVESTMENT TEAMS AND RIGOROUS PROPRIETARY RESEARCH
We describe our investment model as a “community of boutiques.” Each investment team has freedom of philosophy and process, while benefiting from the resources of a large, global firm.

OPEN, COLLABORATIVE CULTURE
We have built our organization to foster healthy debate, diversity of thought, and the free exchange of ideas — conditions we believe are essential for informed investment decision making.

3. AN OVERVIEW OF THE OWNERSHIP, MANAGEMENT AND GOVERNANCE STRUCTURES OF THE ORGANISATION

The ultimate parent of the Wellington Management group is Wellington Management Group LLP (“WMG” or the “Partnership”). WMG is an independent, private partnership that is owned by its partners, all of whom are fully active in the firm. Business oversight is the responsibility of Brendan Swords, Chairman and CEO, and the firm’s Executive Committee.

Management responsibility is carried out by the firm’s line management, under the direction of the CEO.

Wellington Management has a number of committees that are charged with various management and oversight responsibilities (including the examples below). The frequency and timing of meetings varies across committees. They fall into five major categories.

General Management
Managing Partners Committee
Executive Committee
Affiliate Boards

Talent/Resource Management
Operating Committee
Compensation Committees
Information Technology Priorities Committee

Investment Process and Oversight
Investment Stewardship Committee
Investment Review Groups
Trading Policy Review Group

Risk Management and Internal Controls
Audit Committee
Ethics Committee
Pricing Committee
Risk Management Committee

Business Oversight
Diversity Committee
Hedge Fund Oversight Committee
Product Panel

4. AN OVERVIEW OF THE KEY MANAGEMENT AND INVESTMENT PERSONNEL WITHIN THE ORGANISATION

The following diagram summarises the key management and investment personnel for Wellington Management:Australian stewardship code

5. EXPLANATION OF HOW THE ASSET MANAGER ENSURES CLIENT ASSETS ARE MANAGED IN ACCORDANCE WITH THEIR INVESTMENT STRATEGIES AND HOW CONFLICTS OF INTEREST ARE MANAGED

We exercise investment discretion on behalf of our client accounts only when expressly authorized to do so in writing by the client. We exercise this discretion in accordance with client guidelines and limits we place on the aggregate ownership of individual equity securities across all client accounts.

In exercising investment discretion, our portfolio managers manage client accounts in compliance with account guidelines, which are often customized to reflect a particular client’s investment objective, benchmark, risk tolerance and other requirements. Initial client account guidelines are established by agreement between us and the client and are typically included as part of the investment management agreement. From time to time, we negotiate changes to account guidelines with a client. We document changes to client guidelines and provide those changes to the account’s portfolio management team.

We employ a variety of methods to assist portfolio managers in complying with client guidelines. This support includes a dedicated team of guideline monitoring personnel, compliance systems technology, exception identification and escalation, periodic training, consultation and review.

The directors of each investment function at the firm, together with their teams, review the portfolio managers within their respective groups on an ongoing basis. In addition, we have created several formal investment review groups. These groups are intended to support our firm’s fiduciary responsibility to provide competent and professional investment management services to our clients by reviewing the investment process and performance of investment teams.

Our global relationship and client services groups provide a variety of reporting and other services to our clients. We provide detailed portfolio information on our client website on an ongoing basis. On a quarterly basis, we typically provide a written reporting package, including an update of the holdings, transactions and performance of the client’s account as well as commentary on current positioning. As part of this package, we typically share the portfolio manager’s views on the economy and markets. In addition, we periodically provide our clients with white papers on asset allocation issues, investment strategy questions and other relevant topics. Clients receive different levels of service from our firm or have varying access to our investment and other personnel, including varying opportunities to discuss current investment trends or themes. Some of our clients receive investment reports or analyses that other clients do not receive. We make decisions about the level of service offered to any client or group of clients based on a review of client needs and our business considerations.

Conflicts of interest are inherent in any large global investment management business. Asset management firms have to maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from adversely affecting the interests of their clients. To the extent that those conflicts relate to our role as a fiduciary, the management of the conflict is a core fiduciary responsibility. We have extensive policies and procedures for identifying circumstances which may give rise to, and for managing conflicts of interest.

INTERNAL GOVERNANCE

1. ETHICAL CONDUCT AND PROFESSIONAL PRACTICE

Our Code of Ethics (Code) applies to all Wellington Management personnel worldwide. The Code describes the standard of conduct we require of our personnel and sets forth certain restrictions on activities, such as personal trading and gifts and entertainment. Compliance with the Code is a condition of employment for all personnel. A serious violation of the Code or related policies may result in dismissal. A copy of the entire document is available upon request.

Wellington Management seeks excellence in its personnel, the products and services we offer, the way we meet our ethical and fiduciary responsibilities, and the working environment we create. All personnel are required to put our clients’ interests above our own. Our firm’s policies and procedures reflect this principle with respect to conducting the firm’s business.

2. PERSONAL TRADING

All Wellington Management, personnel are considered “access persons” under our Code. They must preclear their personal transactions in covered securities prior to execution, except as specifically exempted under the Code. Some personal securities transactions that are not subject to preclearance must nonetheless be reported, including transactions in open-end mutual funds and variable insurance products that we manage. The Code’s restrictions on personal trading apply to accounts over which an access person and/or certain immediate family members have investment discretion, or from which they enjoy economic benefits. Portfolio managers are subject to additional restrictions on their personal transactions.

The preclearance process tests proposed transactions against a number of substantive restrictions designed to prevent our personnel from taking advantage of our firm’s investment activity on behalf of our clients. We prohibit all personnel from buying or selling securities issued by broker/dealers that are approved for execution of client trades or by securities markets or exchanges on which we trade on behalf of clients. Likewise, we do not allow our personnel to engage in personal transactions involving the direct purchase of any security in an IPO. All personnel are required to provide quarterly reports and certifications regarding their securities transactions and annual reports regarding their securities holdings

3. MANAGEMENT OF CONFLICTS OF INTEREST TO ENSURE CLIENT INTERESTS TAKE PRIORITY (INCLUDING GIFTS AND ENTERTAINMENT)

Conflicts arise in the ordinary course of our business. Some of those conflicts are inherent in any large, global investment management business, while others are a result of our business model. We seek to avoid or minimize these conflicts where reasonably possible. However, some conflicts cannot be avoided, and although others could be, we have determined that doing so would require changes to business or investment practices that, on balance, provide a significant benefit to our firm and/or our clients. Any conflicts that we cannot or have chosen not to avoid are managed through policies and procedures that we believe are sufficient to protect the interests of our clients and fulfill our fiduciary obligations to our clients.

Our Code places restrictions on receipt of gifts, travel, and entertainment opportunities by our personnel. Our personnel occasionally participate in entertainment opportunities that are for legitimate business purposes, subject to limitations set forth in the Code.

4. RISK MANAGEMENT AND COMPLIANCE

Wellington Management identifies risks at the entity or business level as well as the activity or process level. Managers of individual business units are responsible for identifying business risks associated with their functions and monitoring changes in their functions to verify that new risks are identified. Legal & Compliance monitors laws and regulations to identify new laws that emerge or changes to existing laws or regulations.

Market risk is monitored on a daily basis to evaluate the impact on our strategies and portfolios. Portfolio gearing is monitored based on relevant client guidelines. Control and monitoring of market risk utilizes specialized reporting that has been developed to provide investment personnel with information on derivative positions.

Our Compliance Program starts with two fundamental principles. First, each Wellington Management employee serves as a fiduciary to the firm’s clients. Second, each employee is subject to certain securities laws, and to the rules and regulations that implement those laws. Our approach to compliance embraces these fundamental principles and seeks to reinforce them through the engagement of Wellington Management personnel in the process of compliance, as well as through specific policies and procedures. Our overarching policy is to achieve firmwide compliance with all applicable laws and regulations on an employee-by-employee basis, through involvement of all employees and business groups in the compliance process.

5. ERROR CORRECTION POLICY

Our risk-management and compliance processes are designed to minimize the occurrence of errors in our investment process, and we believe that we have strong policies and procedures in place. However, from time to time, errors do occur. They are usually discovered early in the process, often by the trading desk before settlement has occurred or through other internal reviews. When an individual identifies an error, he or she is required to report it to the line manager and Wellington Management’s Error Resolution Council, a committee composed of senior management personnel, for immediate review and determination of the appropriate resolution. If a compensable error impacts a client account, we endeavor to promptly notify the client involved and minimize disruption to the client and to the investment process. The Error Resolution Council is responsible for overseeing the resolution process and for working with line managers to identify issues that may warrant changing procedures.

6. BROKERAGE AND COMMISSIONS

We negotiate commission rates with broker/dealers in advance of trading based on the various types of trade execution that our client accounts may need. In many cases, we also negotiate commission rates with broker/dealers to include research services that are bundled with execution services. We attempt to negotiate rates that maximize the overall benefits received by our clients for their commission expenditures. Those benefits include, but are not limited to, trade execution, the willingness and ability to commit capital and the availability of investment research provided by the broker/dealer. While some client accounts routinely make use of a range of services provided by broker/dealers, an account may make use of a particular service only rarely, if at all. As we cannot predict when orders for a client account will require a particular service, we believe that access to the full range of services provided by broker/dealers generally benefits all client accounts.

We do not own or control a broker/dealer that executes securities trades for client accounts.

7. EQUITABLE ASSET VALUATION AND PRICING

We seek to maintain accurate market valuations of the holdings in our client accounts. We determine values of all securities and other instruments held in client accounts at least monthly. Where reliable third-party vendor prices are readily available, we update those values daily. In addition, we determine fair values for securities and other instruments for which market quotations are not readily available or when the price provided by a pricing source does not, in our view, represent fair value. This pricing is done primarily to assist our portfolio managers in managing client accounts, although certain clients have agreed to use these prices when calculating the market value of their accounts for purposes of calculating our management fees.

We do not act as the pricing agent of record in our capacity as advisor or subadvisor for client accounts, though we will provide assistance to the official pricing agents of those accounts, usually custodian banks or accounting agents, upon request. For example, we provide recommendations regarding the appropriate pricing methodology for fair-valued securities held in client accounts and often will act as the primary or sole pricing source for fair-valued securities held by our Sponsored Funds. In each instance, however, the official pricing agent retains responsibility for determining the value of the securities in question.

8. BEST EXECUTION AND TRADE ALLOCATION

We seek best available price and most favorable execution of the orders directed by our portfolio managers. We define best execution as a process, not a result: it is the process of executing portfolio transactions at prices and, if applicable, commissions that provide the most favorable total cost or proceeds reasonably obtainable under the circumstances (taking into account all relevant factors). Trading practices, regulatory requirements, liquidity, public availability of transaction information and commission structures vary considerably from one market to another. Best execution incorporates many such factors, as well as the portfolio manager’s investment intentions, and involves an evaluation of the trading process and execution results over extended periods. We regularly monitor our trade executions to assess our effectiveness in seeking best execution and use third-party analysis where applicable. We can never know with certainty that we have achieved best execution on any given trade, but we believe that over time we do achieve it. Wellington Management’s allocation policy is designed to allocate trades in a manner that is fair and reasonable to client accounts over time. When orders are substantially similar, Equity and Fixed Income Trading typically aggregates them and places a block order with one or more broker/dealers. After execution, the allocation to a given account may be rounded to the nearest round trading lot or adjusted due to specific market conventions. Wellington Management typically imposes a minimum allocation amount for transactions in equity securities in secondary markets. When a strict pro rata allocation places some client accounts below the minimum allocation amount, an algorithm is used to reallocate the residual shares among the affected accounts. The new allocations are approximately equal in size to the minimum allocation amount. The algorithm weights the participating accounts according to the allocations they would have received under a strict pro rata process.

All executed trade orders are allocated to client accounts on the same business unless market convention dictates otherwise. For equity IPOs, if the resulting allocation received from the underwriting syndicate is sufficient to fill each order, then each order is filled. If, however, the orders exceed the number of shares allocated to the firm, then the shares are automatically distributed pro rata among the participating accounts, based on each account’s equity assets under management. For these purposes, equity assets may include cash, fixed income securities and derivative instruments held in that portfolio. The designated trader reviews the Underwriter report upon allocation to verify that the system allocated the shares correctly.

9. REMUNERATION POLICY

Our compensation plans are designed to be fair and motivational over time in order to attract and retain the best professionals in the investment industry. We provide them with incentives to excel, and reward superior performance. Compensation arrangements for investment professionals typically include a base salary component and one or more variable components. For senior professionals, variable compensation is a substantial portion of total compensation.

The significant number of our professionals who are senior managing directors or managing directors of the firm receive additional merit-based compensation based on the overall performance of the firm and their individual and team contributions to firmwide results.

10. WHISTLE-BLOWER PROTECTION POLICY

Wellington Management staff have the right to report violations of law or regulation to Wellington Management, the Code of Ethics team, the Chief Compliance Officer, the General Counsel or the Chair of the Ethics Committee. They also have the right to report violations of law or regulation directly to relevant governmental agencies. They do not need Wellington Management’s prior authorization to make any such report or disclosures and are not required to notify the firm if any such disclosures are made.

11. TRAINING AND DEVELOPMENT

Wellington Management endeavors to hire, develop and retain personnel with the appropriate knowledge and skills to successfully fulfill their roles. Most portfolio management and trading positions require a minimum of five years of relevant industry experience and an undergraduate degree, coupled with an advanced degree and/or Chartered Financial Analyst designation or efforts towards one. All candidates participate in a vigorous interview process, meeting with many professionals at the firm. Once hired, new employees participate in new employee orientation. In addition to standard human resources-related issues, new employees learn about Wellington Management’s culture, the Code of Ethics and general operating procedures such as client confidentiality, proprietary research and material nonpublic information.

In addition, Wellington Management firmly believes in the value of continuing education. The firm offers many diverse opportunities, both internally and externally, for personal and professional development. On-the-job training is an important responsibility of each line manager.

12. COMPLAINTS AND DISPUTE RESOLUTION

Wellington Management Australia has established formal procedures for dealing with enquiries and complaints by its clients to ensure that all complaints are responded to promptly and in a positive manner, and to provide an efficient, fair and accessible mechanism for complaint resolution.

All material instances of client dissatisfaction (i.e., a complaint), whether verbal, written or electronic, must be communicated to appropriate members of the Wellington Management Australia Team and Compliance. Wellington Management Australia will investigate the client’s allegation(s) and the circumstances that resulted in the complaint and, as appropriate, a response will be prepared and issued to the client.

ASSET STEWARDSHIP

1. MONITORING OF COMPANY PERFORMANCE ON FINANCIAL AND NONFINANCIAL MATTERS

Wellington Management has a long history of conducting independent fundamental research. Monitoring our investee companies and engaging directly with company management on a range of issues, including environmental, social and corporate governance (ESG) matters, has always been a core part of our investment process.

The majority of our company research is the result of direct contact with company management, both in our offices and on site, including contacts with company suppliers, customers and competitors. Every year, Wellington Management participates in more than 10,000 meetings with company management teams from around the world. Portfolio managers, industry analysts and ESG analysts all take part in our ongoing dialogue with companies and we share information from these engagements with one another using a common research platform. This internal platform allows us to share specific company ratings from our fundamental, credit, quantitative and ESG research teams, along with engagement notes from meetings with company managements. Providing this level of transparency and information sharing across the firm facilitates our ongoing monitoring of, and dialogue with, investee companies and helps us prioritise and focus our monitoring and engagement activity.

2. ENGAGEMENT WITH COMPANY MANAGEMENT AND THE BOARD (AS APPROPRIATE) AND ESCALATION OF ISSUES IN INSTANCES WHERE INITIAL ENGAGEMENTS HAVE NOT BEEN ADEQUATELY RESPONDED TO

Wellington Management engages with company management and the board as appropriate. Examples of engagement topics include business strategy, capital structure and material ESG issues relevant to the company’s long-term success such as environmental regulation, employee training and development and senior-level succession planning. During our conversations with company management, we learn about their perspectives and approaches, provide them with feedback on how they can improve and incorporate our findings into our research and ratings. We assess each company relative to its industry and home-market peers, and we pay particular attention to its adherence to regional corporate governance codes in our analysis. For example, if a company fails to comply with the FSC standards, we assess the potential impact on the company’s long-term success and may choose to employ our engagement efforts and proxy voting to address the issue with management.

We have not developed prescriptive guidelines for when and how we will escalate our activities. Rather, decisions to escalate are made on a case-by-case basis by our portfolio management and ESG Research teams. The decision to escalate depends on the materiality of the issue, the responsiveness exhibited by the company to past communications and our assessment of whether such engagement is in the best interests of our clients. Our escalation activities can include meeting with company boards, participating in stakeholder dialogues or submitting proxy votes against company management on behalf of our clients. Our Global Proxy Voting Policy and Guidelines describe our practices around voting.

3. APPROACH TO CONSIDERING ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE FACTORS (RISKS AND OPPORTUNITIES) AND WHETHER THESE CONSIDERATIONS INFLUENCE INVESTMENT DECISION MAKING AND COMPANY ENGAGEMENT

To assist analysts and portfolio managers in fulfilling our stewardship responsibilities, we have a dedicated research team of ESG experts. Our ESG Research Team, part of the central investment research function, researches and provides company- and sector-specific ESG analysis and engages directly with company management teams on ESG topics. The team analyzes and executes proxy voting for over 5,000 company meetings annually, and performs portfolio reviews with portfolio managers to identify holdings with the greatest ESG risks and opportunities.

Examples of topics on which we engage with companies include:

1. Climate change: Global climate change poses significant long-term risks to companies in many industries, especially those most exposed to increased regulation, extreme weather and food and water disruptions. Our ESG Research Team engages with companies to gauge their exposure to climate-related events, assess management’s awareness of this topic and evaluate their risk-management approach.

2. Supply chain management: Supply chain issues can cause operational disruptions and/or brand damage, both of which can affect a company’s bottom line. Our ESG Research Team engages with company managements to better assess their supply chain risks which could include labor strikes, product quality or safety issues, data-security breaches, natural disasters and geopolitical uncertainty.

3. Executive compensation: We strongly agree with the philosophy of pay for performance and believe that company management teams should be incentivised on clear measures that directly drive the long-term performance of their business. Executive compensation is one of the most frequent topics of engagement with our investee companies, and we may meet with management teams multiple times over the course of a year as they consult with us on improving their pay plans.

Wellington Management is organised as a collection of portfolio teams — each with its own unique investment philosophy, approach and time horizon; there is no “house view”. Consistent with this structure, each of our portfolio teams develops its own investment approach whereby ESG considerations are integrated into its research and decision making processes to the extent that it believes these issues may affect the long-term success of a company and investment returns. This can manifest itself within the investment thesis or portfolio weighting for a particular security, as well as within our proxy voting and company engagement efforts. While each portfolio team acts as a fiduciary for its clients, differences in investment philosophy and process across teams means that the emphasis on incorporating ESG factors in the investment decision making process may vary across investment approaches.

4. PROXY VOTING

Clients often give us discretion to vote proxies on securities held in their accounts. We take the responsibility of proxy voting seriously. We have policies and procedures designed to ensure that we collect and analyse all relevant information for each meeting, apply our proxy voting guidelines accurately and execute the votes in a timely manner. Our policies and procedures are contained in our Global Proxy Policy and Procedures.

We vote proxies in the best interests of our clients as shareholders and in a manner that we believe maximises the economic value of their holdings. Importantly, we do not automatically vote proxies either with management or in accordance with the recommendations of third-party proxy providers. We vote according to our own Global Proxy Voting Guidelines, and we employ a third-party vendor to perform administrative tasks related to proxy voting. While our proxy voting guidelines set forth general guidelines for voting proxies, we evaluate each proposal on its merits. The ESG Research Team examines each proxy proposal and recommends voting against proposals that we believe would have a negative effect on shareholder rights or the current or future market value of the company’s securities.

While the ESG Research Team provides proxy voting recommendations, the portfolio manager for the client account has the authority to decide the final vote, absent a material conflict of interest. Each portfolio manager examines and votes each proposal with the goal of maximising the long-term value of securities held in their clients’ portfolios. In addition, there is no “house vote”. Our proxy voting system allows different votes to be submitted for the same security. Our firm is organised as a collection of portfolio teams — each with its own unique investment philosophy, approach and time horizon. Consistent with this structure, various portfolio managers holding the same securities may arrive at different voting conclusions for their clients’ proxies.

While Wellington Management does not rely on any external parties for recommendations or vote determinations, we do subscribe to the research products supplied by various proxy advisors and research providers, including ISS and Glass Lewis. We use an electronic voting platform provided by one of our proxy advisors to facilitate electronic receipt and execution of ballots.

Our actual votes on behalf of a given client or pool are a matter of record for that client or pool, and are disclosed to the respective party in the reports they are entitled to receive. Our record of proxy votes provided to each client includes the name of the security, meeting date, number of shares voted and how we voted on behalf of each client. Summary reporting of our proxy voting activity is included in our Global ESG Research Update, which is published quarterly and made publicly available on the Insights section of our website. We do not disclose information about specific proxy votes publicly, but do provide the relevant data to support public disclosure by those clients that are required to do so by law.

In certain instances, Wellington Management may be unable to vote or may determine not to vote a proxy on behalf of one or more clients. For example, we may be unable to vote proxies when the underlying securities have been lent out pursuant to a client’s securities lending program. In general, Wellington Management does not know when securities have been lent out and are therefore unavailable to be voted. In some circumstances, we may recommend that a client attempt to have its custodian recall the security to permit voting of related proxies. However, efforts to recall loaned securities may not always be successful. Another instance when we may refrain from voting is when the cost of voting outweighs the value of the vote. For example, we typically do not vote in share blocking markets, where countries impose trading restrictions or requirements regarding re-registration of securities held in omnibus accounts in order for shareholders to vote a proxy. The consequences of such requirements — including the potential impact on liquidity — are evaluated on a case-by-case basis when determining whether to vote such proxies.

Day-to-day administration of the proxy voting process is the responsibility of the ESG Research Team. Annually, Wellington Management engages an independent accounting firm to perform an assessment of controls surrounding our proxy voting process. This assessment is made available to clients.

5. COLLABORATIVE ENGAGEMENT WITH OTHER INVESTORS INCLUDING INVOLVEMENT WITH INDUSTRY GROUPS AND ASSOCIATIONS

We have been signatories to the UN Principles for Responsible Investment (PRI) since 2012, and in 2017 we signed the PRI Statement on ESG in credit ratings and the Statement of Support for the Task Force for Climate-Related Financial Disclosures (TCFD). We are also signatories of several stewardship codes, including the UK Stewardship Code, the Hong Kong Principles of Responsible Ownership, the Japan Stewardship Code, and joined those efforts soon after their launch. In addition, we are founding members of the Investor Stewardship Group’s Governance and Stewardship Principles in the US, which launched in January 2017. We are also members of the Council for Institutional Investors, the International Corporate Governance Network, the Asian Corporate Governance Association and the Global ESG Benchmark for Real Assets (GRESB), and became members of the Global Impact Investing Network (GIIN) in 2016.

6. PRINCIPLES USED FOR POLICY ADVOCACY INCLUDING PARTICIPATION WITH INDUSTRY GROUPS AND ASSOCIATIONS

We cultivate relationships with other asset management firms and broader industry organizations to share insights on corporate governance trends and local market considerations. Due to Wellington Management’s significant presence and long-term track record in nearly all sectors of the global securities markets, we often have direct access to company management teams. We believe this access is highly valuable, given the number of meetings we conduct, the breadth of our contacts and the quality of the dialogue. We often prefer to engage privately with our portfolio companies as we have found this encourages openness and a productive engagement dialogue. When private engagement proves ineffective, however, we are willing to collaborate with other investors when such action would be in our clients’ best interests and is permissible under applicable laws and regulations. Questions related to specific collaboration opportunities can be directed to Carolina San Martin, director, ESG Research, at [email protected].

7. THE APPROACH TO CLIENT ENGAGEMENT, EDUCATION AND COMMUNICATION REGARDING ASSET STEWARDSHIP

We provide educational opportunities to a limited number of clients. Those opportunities include roundtable forums or investment institutes where clients meet and exchange investment ideas and techniques with our personnel. We also provide educational services related to various investment topics such as asset allocation, portfolio construction and risk analysis, and integration of environmental, social and corporate governance factors. We select the clients who participate in these events or receive these services at our discretion.

Our Global ESG Research Update report, published quarterly and made available on the Insights section of our website, includes a list of company engagements conducted by our ESG team and statistics summarising proxy voting activity from the previous quarter. The report also includes engagement case studies that provide additional examples of circumstances in which we would be likely to escalate our activities with the intention of protecting and enhancing shareholder value.

1“Wellington Management” means companies conducting investment management business within the Wellington Management Group LLP group of companies.

Published June 2018