Corporate Governance

Shearman & Sterling LLP 2 | Introduction THE FORCES DRIVING ESG It is instructive to identify the forces that have been driving, and that are expected to continue to drive, the ESG movement. • Institutional investors have prioritized ESG and seek to engage with companies with respect to core ESG matters • ISS and Glass Lewis have indicated that they will make voting recommendations based on particular ESG positions taken by companies 1 See Flash Report, Governance & Accountability Institute, "86% of S&P 500 Index Companies Publish Sustainability Reports in 2018" (May 16, 2019). 2 See Principles for Responsible Investment, "PRI Signatory Growth Shows Strong Momentum" (January 2019). 3 See State Street Global Advisers, "Aim Higher: Helping Investors Move From Ambition to Action With ESG Investment Approaches" (October 2, 2018). 4 See Press Release, Business Roundtable, "Business Roundtable Redefines the Purpose of a Corporation to Promote 'An Economy That Serves All Americans'" (August 19, 2019). 5 See Institutional Shareholder Services, "Early Review of 2019 U.S. Proxy Season Vote Results" (June 5, 2019). • ESG research and ratings firms have proliferated in response to the desires of investors and other stakeholders to measure ESG performance of companies • ESG standard-setting bodies have continued to emerge, offering potential paths to greater standardization of ESG reporting • ESG activism continues to rise and has been characterized by support from special interest groups, institutional investors and employees • Although the U.S. federal government and the SEC have not been particularity active in this area, state governments and European countries have been catalysts for change THE FOLLOWING STATISTICS SERVE AS A TESTAMENT TO ESG PROLIFERATION: 181 86% of the S&P 500 have published sustainability reports 1 Over 25% of the $88 trillion assets under management globally are now invested according to environmental, social and governance principles 3 Over Signatories to the Principles for Responsible Investment (PRI) reached 2,232 in 2018, a 21% increase on the previous calendar year 2 corporate members of the Business Roundtable, including 56 of the Top 100 Companies, issued a statement that seeks to redefine the long-held view that corporations exist to serve shareholders and maximize profits to expand the constituencies to whom corporations answer. The statement includes shareholders, but adds customers, employees, suppliers and communities as stakeholders to whom companies owe a commitment 4 Similar to 2017 and 2018, the aggregate number of E&S shareholder proposals submitted in 2019 exceeded the number of G (governance) proposals 5

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