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Alphinity Investment Management Limited

PRI reporting framework 2020

Basic information [OO 01 - 09] Asset class implementation gateway indicators [OO 10 - 12] Peering questions [OO LE 01 - HF 01]

Strategy and Governance

Investment policy [SG 01 - 04] Objectives and strategies [SG 05 - 06] Governance and human resources [SG 07 - 08] Promoting responsible investment [SG 09 - 11] Outsourcing to fiduciary managers and investment consultants [SG 12] ESG issues in asset allocation [SG 13 - 15] Innovation [SG 18] Communication [SG 19]

Direct - Listed Equity Incorporation

ESG incorporation in actively managed listed equities [LEI 01 - 10] Implementation processes [LEI 01 - 10] (A) Implementation: Screening [LEI 04 - 06] (B) Implementation: Thematic [LEI 07] (C) Implementation: Integration of ESG factors [LEI 08 - 10] Outputs and outcomes [LEI 12 - 13]

Direct - Listed Equity Active Ownership

Overview [LEA 01] Engagement [LEA 02 - 08] Outputs and outcomes [LEA 09 - 11]

Confidence building measures

Confidence building measures [CM1 01 - 07]

Export Public Responses

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

We use our own research or voting team and make voting decisions without the use of service providers.

We hire service providers who make voting recommendations and/or provide research that we use to guide our voting decisions.

Based on

The service-provider voting policy we sign off on

Our own voting policy

Our clients` requests or policies

Other (explain)

We hire service providers who make voting decisions on our behalf, except in some pre-defined scenarios where we review and make voting decisions.

We hire service providers who make voting decisions on our behalf.

12.2. Provide an overview of how you ensure that your agreed-upon voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

It is the same people who determine the voting policy that make the decisions about the votes and instruct the votes to be made. Contentious issues are generally discussed among the investment team

We use the advice of two proxy advisors but make our own decisions about votes, subject to the direction of individual clients.

12.3. Additional information.[Optional]

We consider the recommendations of two proxy advisors but ultimately make our own decision on voting. Any vote adverse to board or management recommendation is clearly raised with the company in advance of the vote for clarification and to encourage better future corporate behaviour. Some of our wholesale clients exercise their votes themselves and generally seek advice from us, especially on controversial matters; others may occasionally instruct us to vote in a certain way, however any instruction by a client does not bind our vote for the other shares at our discretion.

LEA 13. Percentage of voting recommendations reviewed (Not Applicable)

LEA 14. Securities lending programme

14.1. Does your organisation have a securities lending programme?

Yes

14.2. Describe why your organisation does not lend securities.

We consider lending securities to be against the interests of the clients who have entrusted us with their funds

14.4. Additional information. [Optional]

LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

100%

99-75%

74-50%

49-25%

24-1%

Neither we nor our service provider(s) raise concerns with companies ahead of voting

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

Vote(s) concerned selected markets

Vote(s) concerned selected sectors

Vote(s) concerned certain ESG issues

Vote(s) concerned companies exposed to controversy on specific ESG issues

Vote(s) concerned significant shareholdings

Client request

Other

15.3. Additional information. [Optional]

We raise any contentious issue with the company involved before deciding on the final vote in order to ensure we have a full understanding of the issue involved and the company's perspective on it. Generally speaking it is better to have this sort of dialogue outside the company general meeting schedule as by that time the agnda has already been set and it is too late to influence, other than by making an adverse vote which might be emotionally satisfying but probably doesn't achieve very much

LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

100%

99-75%

74-50%

49-25%

24-1%

We do not communicate the rationale to companies

Not applicable because we and/or our service providers did not abstain or vote against management recommendations

16.3. In cases where your organisation does communicate the rationale for abstaining or voting against management recommendations, indicate whether this rationale is made public.

Yes

16.4. Additional information. [Optional]

We are happy to share this information with clients but at this point not with the general public. The vote itself however is public

LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

We do track or collect this information

Votes cast (to the nearest 1%)

100 %

Specify the basis on which this percentage is calculated

Of the total number of ballot items on which you could have issued instructions

Of the total number of company meetings at which you could have voted

Of the total value of your listed equity holdings on which you could have voted

We do not track or collect this information

17.3. Additional information. [Optional]

LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate whether you track the voting instructions that you or your service provider on your behalf have issued.

Yes, we track this information

18.2. Of the voting instructions that you and/or third parties on your behalf have issued, indicate the proportion of ballot items that were:

Voting instructions	Breakdown as percentage of votes cast
For (supporting) management recommendations	95 %
Against (opposing) management recommendations	05 %
Abstentions	0 %

100%

No, we do not track this information

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies which you have engaged.

100

18.4. Additional information. [Optional]

We do not see voting against as a source of pride, rather it is disappointing to have to do it as it suggests our expectations of management was not clearly enough stated or our views were ignored.

Due to the quality of companies we own and the vetting process they go through in order to get into the portfolio, we do not often need to vote against management recommendations

LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

Yes

19.2. Indicate the escalation strategies used at your organisation following abstentions and/or votes against management.

Contacting the company’s board

Contacting the company’s senior management

Issuing a public statement explaining the rationale

Initiating individual/collaborative engagement

Directing service providers to engage

Reducing exposure (holdings) / divestment

Other

19.3. Additional information. [Optional]

Reaction depends on the seriousness of the issue. If it were serious enough we would consider divestment although this would be extreme, few matters that come before boards are that critical

If moderately serious we would collaborate with other investors, most likely through RIAA or PRI channels

More likely reaction is to re-engage with the company and set out the reasons why we voted against the issue and encourage the company to think/behave differently for future

LEA 20. Shareholder resolutions

20.1. Indicate whether your organisation, directly or through a service provider, filed or co-filed any ESG shareholder resolutions during the reporting year.

Yes

20.7. Additional information. [Optional]

LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

Add Example 1

ESG Topic	Executive Remuneration\|Company leadership issues Executive Remuneration Climate Change Human rights Company leadership issues Pollution General ESG Diversity Shareholder rights Health and Safety Sustainability reporting Water risks Labour practices and supply chain management Anti-bribery and corruption Deforestation Aggressive tax planning Cyber security Political spending / lobbying Other governance Plastics Other
Conducted by
Objectives	Assess the appropriateness of what at first seemed to be a fairly convoluted and lucrative remuneration structure
Scope and Process	A property development company disclosed what appeared to be extreme outcomes for management remuneration last year, which caused concern in the investment community. We engaged extensively with directors to understand the structure and how the outcomes were arrived at. The company had performed extremely well and much of the apparent pay was a result of shares having appreciated several times over the period of time between issuance some years ago and when they vested. Actual pay for the current year was quite moderate (in a relative sense) and we supported the remuneration report
Outcomes

Add Example 2

ESG Topic	Climate Change\|Political spending / lobbying Executive Remuneration Climate Change Human rights Company leadership issues Pollution General ESG Diversity Shareholder rights Health and Safety Sustainability reporting Water risks Labour practices and supply chain management Anti-bribery and corruption Deforestation Aggressive tax planning Cyber security Political spending / lobbying Other governance Plastics Other
Conducted by
Objectives	Gas exploration company was not, in our view, adequately disclosing future emissions projections so the market was unabile to assess whether or not it was consistent with Paris goals. It was also a member of an industry body that appeared to be working against the interests of controlling emissions.
Scope and Process	We engaged with the company in advance of the shareholder meeting to get its view on the resolutions. When it transpired it would not, in our view, adequately respond to them we voted in favour of two of the resolutions (although not the enabling resolution) in order to send a message to the board that it should be more proactive. We will keep engaging over the next year to encourage compliance and would consider voting in favour of the enabling resolution in the future if adequate action is not seen.
Outcomes

Add Example 3

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Add Example 10

21.2. Additional information. [Optional]

We do not use a service provider for anything other than the mechanical action of voting - we assess and decide on the merits of each issue before the meeting

It is worth noting that effective engagement needs to be undertaken well before an issue is put to proxies: by that time the issues are generally decided and it is too late to exercise any influence other than by voting against something, which generally feels good but often doesn't achieve very much. The most effective form of engagement is communicating expectations around the issues facing a particular company well in advance of a vote being taken, which is what we try to do.

In our market, the most common resolutions put to company meetings are regarding voting on directors and remuneration matters

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