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 in our 2020 engagements. Our Feedback on Proxy
program is designed to reach out to corporate boards, explaining our voting rationale and providing
detailed feedback on governance concerns. We will address such topics as:

• 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 in our 2020
engagements. We will spearhead critical collaborations to drive sector-wide progress on policies and
performance standards, and we will address the need for systemic solutions to systemic problems.

• We will continue to co-lead collaborative dialogues through the $41 trillion Climate Action 100+
  initiative, building on the successes of 2019. 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, we will continue to push Ford and GM to 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 transition and we will continue to engage with companies such as AltaGas and ATCO on aligning with the opportunities of low carbon and renewable energy.
• Methane will remain a key feature of our climate focus as we collaborate with other investors to engage companies and policymakers. We will continue our solo engagements with 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.
• We will continue to engage financial institutions such as RBC, TD, Scotiabank, BMO and CIBC on implementing the recommendations from the Task Force on Climate-related Financial Disclosures.

This year Canada will host the World Circular Economy Forum, a key milestone for growing
Canada’s circular economy ambitions. Through our role as a founding member of the CELC, we
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 of our work. We will continue to engage 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 our involvement in the Plastic Solutions Investor Alliance, we will build on the successes
  of 2019 where we saw companies such as Unilever, PepsiCo and Starbucks commit to ambitious
  new targets on the use and recycling of plastics. We will continue to push these companies to
  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 our ESG program.

• We will continue our 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 our role on the steering committee of the Investor Alliance on Human Rights, we will
  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.
• We will continue our successful rights-based dialogues with companies such as Amazon and
  Alphabet (Google).
• Supply chains can hide significant human rights risks, and we will 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.
• In aligning ourselves with the OECD Guidelines, we will continue to perform our own due
  diligence to identify any human rights concerns within our portfolio, and will actively engage
  where we find 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 our work with the Access to Nutrition Index, we will continue to push companies such
  as PepsiCo and Unilever to ensure that access to healthy and nutritious products is not limited
  to the wealthy.
• Through our collaboration with the Access to Medicine Index, we continue to push pharmaceutical
  companies such as Johnson & Johnson, Pfizer, and others to ensure fair and equitable access
  (and pricing) to critically important medicine.
• We will continue to encourage the growth of responsible and humane stewardship practices for
  farm animals through our support for the Business Benchmark on Farm Animal Welfare.