ESG Framework

Good governance is the pillar upon which long-term corporate success is built. Including ESG factors as a principle
of good governance helps boards of directors not just to set strategy, but to align corporate culture with values.

Effective governance will be an overarching theme. Feedback on Proxy programs is designed to reach out to corporate
boards, explaining voting rationale and providing detailed feedback on governance concerns. Focus on the following Topics:

• Board diversity
• Board and director independence
• Linking equitable compensation to ESG outcomes
• Effective oversight of key ESG issues

Climate change is the defining challenge of our time, and will again occupy centre stage with future engagements.
Critical collaborations will drive sector-wide progress on policies and performance standards, and address the need
for systemic solutions to systemic problems.

• collaborative dialogues through the $41 trillion Climate Action 100+ initiative, building on the historical successes.
  This will deepen the strategic response to the energy transition from companies such as Suncor Energy, Canadian
  Natural Resources Ltd. and Teck Resources.
• In the auto industry, Ford and GM must evolve their fleets toward a low-carbon future, and engage parts suppliers
  to enhance their own low-carbon strategies.
• Utilities will play a key role in the energy transition and engagement with companies such as AltaGas and ATCO on
  aligning with the opportunities of low carbon and renewable energy.
• Methane will remain a key feature for climate change and collaboration with other investors to engage companies
  and policymakers.  Some will focus on leading companies including Cenovus Energy, Enbridge and Nutrien to further
  define what alignment to the Paris Agreement looks like, what a “net-zero” future means for industry, and importantly,
  how companies will get there.
• Engagement with financial institutions such as RBC, TD, Scotiabank, BMO and CIBC on implementing the
  recommendations from the Task Force on Climate-related Financial Disclosures.

Canada will host the World Circular Economy Forum, a key milestone for growing Canada’s circular economy
ambitions. CELC will be working with companies and investors to ensure the success of the Forum and help create
needed momentum.

• Eliminating plastic waste remains a top focus. Engagement with consumer companies such as Canadian Tire, Loblaw
  and Metro on their strategies for reducing or eliminating the use of unnecessary plastics, while increasing recycling
  and the use of recycled content.
• Through the Plastic Solutions Investor Alliance, build on the successes where companies such as Unilever, PepsiCo
  and Starbucks commit to ambitious new targets on the use and recycling of plastics.  Rigor to ensure these companies
  meet these targets, while leveraging their momentum to extract similar commitments from other companies.

Respect for human rights is foundational to our commitment to responsible investment, touching all aspects of
ESG programs.

• Continued engagement with the “big five” banks (BMO, CIBC, RBC, Scotiabank, and TD) on responsible
  lending, ensuring they align their processes with key frameworks such as the UN Guiding Principles on Business
  and Human Rights, and the UN Declaration on the Rights of Indigenous Peoples.
• Through the Investor Alliance on Human Rights, continue to advocate for human rights to be at the core of
  the new digital economy, whether it be protecting digital rights, ensuring online privacy, or understanding the
  intersection of human rights and artificial intelligence.
• Continue successful rights-based dialogues with companies such as Amazon and Alphabet (Google).
• Supply chains can hide significant human rights risks, continue to engage with consumer companies such as
  Canadian Tire, Loblaw and others to ensure they are not causing or contributing to negative human rights
  impacts through their supply chains.
• Aligning with OECD Guidelines, perform due diligence to identify any human rights concerns within investment
  portfolios, and actively engage where there are concerns.

A fundamental objective of the UN Sustainable Development Goals is to foster a world where everyone has an
equal opportunity to exercise their right to live a healthy and fulfilling life. Corporate actions can drive toward
this goal – but they can also undermine it.

• Through the Access to Nutrition Index, continue to influence companies such as PepsiCo and Unilever to
  ensure that access to healthy and nutritious products is not limited to the wealthy.
• Collaboration with the Access to Medicine Index, continue to influence pharmaceutical companies such as
  Johnson & Johnson, Pfizer, and others to ensure fair and equitable access (and pricing) to critically
  important medicine.
• Encourage the growth of responsible and humane stewardship practices for farm animals through support
  for the Business Benchmark on Farm Animal Welfare.