COLOPLAST LIMITED RETIREMENT BENEFITS SCHEME FOR THE YEAR ENDED 30 SEPTEMBER 2020 TRUSTEES' REPORT 

Implementation Statement 

Overview

This implementation statement describes the actions taken over the past year and how they relate to the intentions we have set out in the Scheme's Statement of Investment Principles (the "SIP"). 

The Scheme's assets are held in pooled investment funds (via the Mobius Life investment platform) and the day-to-day management of these investments (in cluding the responsibility for voting and engaging with companies) is delegated to the fund managers of the pooled investment funds (the 'fund managers'). 

The fund managers of the pooled investment funds are Legal & General Investment Management (LGIM), BNY Mellon Investment Management (BNYM) and BMO Global Asset Management (BMO). 

As Trustees of the Scheme's assets, we are responsible for the selection and retention of the funds. Analysing the voting and engagement activities, which we include details on below, is a useful exercise to help us ensure they remain appropriate and are consistent with the managers' stated policies in this regard. We will engage with the fund managers should we have any concerns about the voting and/or engagement activities carried out on our behalf. In the opinion of the Trustees the policies in the SIP, relating to voting and engagement, have been followed during the year. 

During the year to 30 September 2020, the Trustees updated the SIP to ensure they met new regulations that came into effect from 1 October 2020. 

Changes to investment strategy 

During the year the Trustees decided to implement a change to the investment strategy designed to reduce risk and improve return expectations. Risk was reduced by using Liability Driven Investment (LDI) funds to better manage interest rate and inflation risk and diversifying sources of growth, this enabled a higher overall allocation to return-seeking assets. The change in strategy involved disinvestment of the LGIM passive equity and corporate bond funds and subsequent investment into the LGIM World (ex UK) Equity Index Fund (GBP currency hedged), LGIM Dynamic Diversified Fund, BNYM Global Dynamic Bond Fund and two BMO Dynamic LDI Funds. This change to the investment strategy was based on advice received from their investment consultant. The information below is based on the funds used under the new investment strategy. 

Voting and engagement 

Details on voting and engagement activities provided by LGIM, BMO and BNYM are set out below. In order to produce this statement we have asked LGIM, BMO and BNYM some questions on their policies, actions and examples relating to their voting and engagement activities. We have then reviewed these and summarised their responses for the purposes of this statement. 

LGIM have provided information relating to the World (ex UK) Equity Index Fund (GBP currency hedged) and the Dynamic Diversified Fund, as these funds hold equities for which they have voting rights. 

The BNYM Global Dynamic Bond fund does not hold equities and given that bonds do not confer voting rights, there was no voting carried out in relation to this fund. However, BNYM does undertake engagement activities in respect of its bond holdings and we have included an example below. 

The BMO LDI Funds do not hold equities and given that these investments do not confer voting rights, there was no voting carried out in relation to these funds. However, BMO does undertake engagement activities with counterparty banks on relevant issues, where applicable. BMO report on this on a bi-annual basis, therefore the information provided covers the year to 30 June 2020. 

LGIM voting and engagement activities

LG/M's voting and engagement activities are driven by ESG professionals and their assessment of the requirements in these areas seeks to achieve the best outcome for all our clients. Our voting policies are reviewed annually and take into account feedback from our clients. 

All decisions are made by LG/M's Investment Stewardship team and in accordance with our relevant Corporate Governance & Responsible Investment and Conflicts of Interest policy documents which are reviewed annually. Each member of the team is allocated a specific sector globally so that the voting is undertaken by the same individuals who engage with the relevant company. This ensures our stewardship approach flows smoothly throughout the engagement and voting process and that engagement is fully integrated into the vote decision process, therefore sending consistent messaging to companies. 

LG/M's Investment Stewardship team uses ISS's 'ProxyExchange' electronic voting platform to electronically vote clients' shares. All voting decisions are made by LGIM and we do not outsource any part of the strategic decisions. Our use of ISS recommendations is purely to augment our own research and proprietary ESG assessment tools. The Investment Stewardship team also uses the research reports of Institutional Voting Information Services (/VIS) to supplement the research reports that we receive from /SS for UK companies when making specific voting decisions 

To ensure our proxy provider votes in accordance with our position on ESG, we have put in place a custom voting policy with specific voting instructions. These instructions apply to all markets globally and seek to uphold what we consider are minimum best practice standards which we believe all companies globally should observe, irrespective of local regulation or practice. 

We also believe public transparency of our vote activity is critical for our clients and interested parties to hold us to account. In determining significant votes, LG/M's Investment Stewardship team takes into account the criteria provided by the Pensions & Lifetime Savings Association consultation (PLSA).

LGIM Dynamic Diversified Fund

Voting data 

LGIM were eligible to vote on 56,426 resolutions. They voted on 99.1 % of the resolutions. Votes for: 84%, Against 16%, Abstained: <1 %. In 11 % of occasions LGIM voted against the recommendation provided by a proxy advisor (ISS).

Most significant votes

LGIM provided the following examples in response to our request to provide details of their most significant votes: 

1. AMAZON

Date: 27/05/2020

Of 12 shareholder proposals, we voted to support 10. We looked into the individual merits of each individual proposal, and there are two main areas which drove our decision-making: disclosure to encourage a better understanding of process and performance of material issues and governance structures that benefit long-term shareholders.

In addition to facing a full slate of proxy proposals, in the two months leading up to the annual meeting, Amazon was on the front lines of a pandemic response. The company was already on the back foot owing to the harsh workplace practices alleged by the author of a seminal article in the New York Times published in 2015, which depicted a bruising culture. The news of a string of workers catching COVID-19, the company's response, and subsequent details, have all become major news and an important topic for our engagements leading up to the proxy vote.

Our team has had multiple engagements with Amazon over the past 12 months. The topics of our engagements touched most aspects of ESG, with an emphasis on social topics: 

• Governance: Separation of CEO and board chair roles, plus the desire for directors to participate in engagement meetings

• Environment: Details about the data transparency committed to in their 'Climate Pledge'

• Social: Establishment of workplace culture, employee health and safety

The alegations from current and former employees are worrying. Amazon employees have consistently reported not feeling safe at work, that paid sick leave is not adequate, and that the company only provides an incentive of $2 per hour to work during the pandemic. Also cited is an ongoing culture of retaliation, censorship, and fear. We discussed with Amazon the lengths the company is going to in adapting their working environment, with claims of industry leading safety protocols, increased pay, and adjusted absentee policies. However, some of their responses seemed to have backfired. For example, a policy to inform all workers in a facility if COVID-19 is detected has definitely caused increased media attention. 

Despite shareholders not giving majority support to the raft of shareholder proposals, the sheer number and focus on these continues to dominate the landscape for the company. Our engagement with the company continues as we push it to disclose more and to ensure it is adequately managing its broader stakeholders, and most importantly, its human capital. 

2. EXXONMOBIL

Date: 27/05/2020

Resolution: Elect Director Darren W. Woods

Vote: Against

In June 2019, under our annual 'Climate Impact Pledge' ranking of corporate climate leaders and laggards, we announced that we will be removing ExxonMobil from our Future World fund range, and will be voting against the chair of the board. Ahead of the company's annual general meeting in May 2020, we also announced we will be supporting shareholder proposals for an independent chair and a report on the company's political lobbying. Due to recurring shareholder concerns, our voting policy also sanctioned the reappointment of the directors responsible for nominations and remuneration.

93.2% of shareholders supported the re-election of the combined chair and CEO Darren Woods.

Approximately 30% of shareholders supported the proposals for independence and lobbying.

We believe this sends an important signal, and will continue to engage, both individually and in collaboration with other investors, to push for change at the company.

Our voting intentions were the subject of over 40 articles in major news outlets across the world, including Reuters, Bloomberg, Les Echos and Nikkei, with a number of asset owners in Europe and North America also declaring their intentions to vote against the company.

We voted against the chair of the board as part of LG/M's 'Climate Impact Pledge' escalation sanction.

3. BARCLAYS

Date: 07/05/2020

Resolution: Approve Barclays' Commitment in Tackling Climate Change

Vote: For (supported by 99.9% of shareholders)

The resolution proposed by Barclays sets out its long-term plans and has the backing of ShareAction and co-filers. We are particularly grateful to the Investor Forum for the significant role it played in coordinating this outcome. 

The hard work is just beginning. Our focus will now be to help Barclays on the detail of their plans and targets, more detail of which is to be published this year. We plan to continue to work closely with the Barclays board and management team in the development of their plans and will continue to liaise with ShareAction, Investor Forum, and other large investors, to ensure a consistency of messaging and to continue to drive positive change. 

Since the beginning of the year there has been significant client interest in our voting intentions and engagement activities in relation to the 2020 Barclays AGM. We thank our clients for their patience and understanding while we undertook sensitive discussions and negotiations in private. We consider the outcome to be extremely positive for all parties: Barclays, ShareAction and long-term asset owners such as our clients. 

4. OLYMPUS CORPORATION

Date: 30/07/2020

Resolution: Elect Director Takeuchi, Yasuo

Vote: Against 

Japanese companies in general have trailed behind European and US companies, as well as companies in other countries, in ensuring more women are appointed to their boards. The lack of women is also a concern below board level. LGIM have for many years promoted and supported an increase of women on boards, at the executive level and below. On a global level we consider that every board should have at least one female director. We deem this a de minimis standard. Globally, we aspire to all boards comprising 30% women. Last year in February we sent letters to the largest companies in the MSC/ Japan which did not have any women on their boards or at executive level, indicating that we expect to see at least one woman on the board. One of the companies targeted was Olympus Corporation. 

In the beginning of 2020, we announced that we would commence voting against the chair of the nomination committee or the most senior board member (depending on the type of board structure in place) for those companies included in the TOPIX100. 

We opposed the election of this director in his capacity as a member of the nomination committee and the most senior member of the board, in order to signal that the company needed to take action on this issue. 94.90% of shareholders supported the election of the director. LGIM will continue to engage with and require increased diversity on all Japanese company boards. 

LGIM Global Equity Market Weight (30:70) Index - 75% GBP Hedged Fund

Voting data

LGIM were eligible to vote on 52,402 resolutions. They voted on 99.2% of the resolutions. Votes for: 84%, Against 16%, Abstained: <1%. In 11% of occasions LGIM voted against the recommendation provided by a proxy advisor (ISS). 

Most significant votes 

There is a significant overlap between the voting examples provided by LGIM. The examples provided for the Dynamic Diversified Fund also apply to this fund. 

BNY Mellon engagement activities 

The following information is based on the responses BNYM have provided in response to our questions on voting and engagement and provides an explanation as to how they co-ordinate their voting and engagement activities with companies. Newton are a subsidiary of BNYM and are the entity that manage the Global Dynamic Bond Fund.

We believe the value of our clients' portfolios can be enhanced by the application of good stewardship. This is achieved by engagement with investee companies and through the considered exercise of voting rights. Our understanding of a company's fundamental business enables us to assess the appropriate balance between the strict application of corporate governance policies and taking into account a company's unique situation. 

We do not maintain a strict proxy voting policy. Instead, we prefer to take into account a company's individual circumstances, our investment rationale and any engagement activities together with relevant governing laws, guidelines and best practices. For the avoidance of doubt, all voting decisions are made by Newton.

It is only in the event of a material potential conflict of interest between Newton, the investee company and/or a client that the recommendations of the voting service used (Institutional Shareholder Services, or the ISS) will take precedence. It is also only in these circumstances when we may register an abstention given our stance of either voting in favour or against any proposed resolutions. The discipline of having to reach a position of voting in favour or against management ensures we do not provide confusing messages to companies. 

Voting decisions take into account local market best practice, rules and regulations while also supporting our investment rationale. For example, when voting on the election of directors in Japan, we are unlikely to vote against a board chair should the board not be majority independent given that only recently the corporate governance code has recommended boards appoint independent directors. However, in the UK, where majority independent boards are well established and expected by investors, we are likely to vote against the chair and non-independent directors. This being said, we frequently vote against executive pay at US companies despite it being accepted US market practice of granting significant awards of free shares, as we believe executive pay should be aligned with performance. 

Voting data 

The fund does not hold equities and therefore doesn't have the same voting rights as some other funds. However, Newton's engagement activities are undertaken for all the companies that they hold and so they also engage with the companies whose bonds are held in this fund, for example: 

Dollar General

BNYM took part in a call to provide the company with feedback on its governance structures and executive pay arrangements. This was a new initiative by the company and was in the context of a general improvement in shareholder communication and disclosure on ESG topics. Looking at the traditional indicators of good corporate governance, the board is very strong, with a high number of independent members, fairly low average tenure of each member, a fully independent chair, and a long track record of board diversity well before it became an investor concern. However, BNYM encouraged the company to link its long-term incentive scheme for the executive team to measurable financial performance. They also suggested a framework for the integration of climate-change considerations into its board-level risk management process.

BNYM believe that with the company factoring climate change considerations more formally into its oversight structure will ensure it is better placed to manage this risk. Ultimately, BNYM believe this will help the company's long-term sustainability as a going concern and, in turn, help achieve long­term sustainable returns for investors. In addition, BNYM believe that aligning executive's personal financial reward more closely with the company's performance will provide an improved outcome for investors. 

BMO's engagement activities

The Dynamic LDI funds contains investments that provide exposure to long dated interest rates I inflation. It does not hold any physical equity investments and is therefore not eligible to vote. However, BMO does still engage with counterparty banks on relevant issues. For example: 

Credit Suisse (one of the counterparty banks) have signed up to the UN Principles for Responsible Banking. The Principles provide a framework for banks to be more transparent on how their products and services create value for their customers, clients, investors, as well as society. They also announced their decision to stop financing the development of new coal-fired power plants. This is in addition to the bank's existing policy of not providing any form of financing that is specifically related to the development of new greenfield thermal coal.