Issue link: https://digital.shearman.com/i/1162884
YES NO Shearman & Sterling LLP The Climate Changes for ESG | 21 MEASURING SUCCESS It is often said that you measure what is important. Setting goals and measuring the results of an ESG initiative is a critical step in establishing the company's focus. Measurement provides a company with the means to judge the success of its initiative and provides investors and other constituents with the ability to assess a company's progress over time. The credibility of a measurement is greatly enhanced if the measure is reported on a consistent basis, is calculated in a manner that is comparable to the calculations performed by other companies and is publicly disclosed. Shareholders Success with shareholders can be measured in various ways. A company's shareholder engagement process can provide the company with real insights into the company's approach and performance with respect to ESG matters, indicated by candid discussions and feedback and reduction in shareholder proposals. Several large institutional shareholders have made it quite clear that ESG is a top engagement priority for them. Ratings As ESG ratings continue to proliferate, the information used to set ratings protocols and complete evaluations is limited, but it is getting better. As more and more companies provide ESG disclosures and drive their own disclosures to get better ratings, the information available to raters is improving. As the quality of the ratings improves, so will the influence and importance of a rating firm and a positive rating. Improving a rating is one of the more objective ways to measure success. Employees and Customers Success can also be measured in other less direct ways. Employees and customers can provide feedback on how a company is addressing ESG issues and, perhaps more importantly, whether the company's ESG message is getting out to the right people in the right way. Feedback can be seen in employee or customer surveys that focus on specific ESG issues or broader connection with corporate values. Employee recruitment and retention rates should not be overlooked as indicators of how a company's ESG message is being received. Absence of Negative Events The absence of the occurrence of a "bad" event, such as an employee action, protest or strike, a customer boycott or regulatory investigation, the avoidance of exclusion from stock market indices or ESG-focused funds, the decrease or elimination of ESG- focused shareholder proposals as compared to peers and improved employee satisfaction and decreased employee turnover are all items which can, at least in part, be attributed to improved ESG performance. Accolades and Recognition A company's ESG performance can also be evaluated by the accolades or recognition it receives as well as through its accomplishments — both the achievement of the goals it has set as well as by taking a leadership in their industries. IS ESG OVERSIGHT DISCLOSED IN COMMITTEE CHARTERS OR CORPORATE GOVERNANCE GUIDELINES? YES 78 22 NO