HDFC Life Insurance Co Ltd

**1.3 Responsibility for oversight of the stewardship activities** The Audit Committee of Exide Life Insurance shall ensure that there is an effective oversight of the stewardship activities. [...] **1.4 Review and disclosure of Stewardship Policy** This Stewardship Policy would be reviewed periodically and amendments thereto, shall be publicly disclosed on the website of Exide Life Insurance [...] **1.5 Disclosure of Stewardship Activities** Exide Life Insurance shall also disclose the requisite compliance and non-compliance with the Stewardship Code and Stewardship Principles as per the requirement of the regulation. [...] **2. Managing Conflict of Interest** 2.2 In resolutions where there is any perceived conflict of interest, the decisions pertaining to the same would be recorded, and the policyholders' interest would be considered paramount while arriving at these decisions. The voting decision would be accordingly taken by the Chief Investment Officer in the best interests of the policyholders, and a clear segregation of the voting function and client relations/sales functions would be maintained. If the Chief Investment Officer has an actual/potential conflict of interest in the transaction, the matter would be referred to the Audit Committee. [...] **6. Voting and disclosure of voting activity** 6.5 The Audit Committee shall monitor oversight on the voting mechanism, and review that the Investment Team has voted on important decisions that may affect the interest of policyholders/shareholders, and the rationale recorded for vote decision is prudent and adequate. 6.6 Exide Life Insurance shall disclose all voting activity on a quarterly basis as a part of Public Disclosures on its website in the prescribed format and endorsed by the Compliance Officer. [...] **7. Reporting of Stewardship Activities** 7.2 The Board of Exide Life Insurance shall ensure that there is effective oversight on the company's stewardship activities, and the Audit Committee of the Board shall exercise the same. Exide Life Insurance shall also report its compliance status to IRDAI, with the Stewardship Principles in the prescribed format. This would be on an annual basis, approved by the Board on recommendation of the Audit Committee, and endorsed by the CEO and the Compliance Officer and shall be filled on or before 30th June every year (or as per the date as specified by IRDAI). The report would detail any non-compliance, with justification thereof, with the Stewardship Principles.

Our Board of Directors has the ultimate responsibility to set strategic direction and risk appetite for ESG issues such as climate-related risks and opportunities. The board-level oversight of ESG risk is integrated with Risk Management Committee which has the overall responsibility to oversee risk policy implementation and operational controls. The committee is supported by Risk Management Council (RMC) which articulates the risks and manages risk mitigation measures. ESG performance including emissions management and related initiatives is reviewed by the ESG Management Committee, with the oversight lying with Board CSR & ESG committee. Besides, the ESG Management Committee, under the leadership of the Executive Director and Chief Financial Officer (CFO), and the Risk Management Committee enforce policies and operational controls for ESG risks. The ESG Governance Committee constituted under the Investment team is tasked with responsibility of reviewing and integrating ESG criteria in investment decisions.

#### - Oversight of Stewardship activities of HDFC Life shall be undertaken by the Investment Committee, constituted as per the Guidelines issued by IRDAI for Corporate Governance for insurers in India. The Investment Committee shall be responsible for monitoring implementation of the Stewardship Code duly approved by the Board. [...] #### - The investment team of HDFC Life will be responsible for ongoing monitoring of the investee companies and will also be responsible for engaging with the managements of the investee companies. The investment team will seek guidance and approvals from the Investment Committee with respect to the engagement and intervention with the investee companies. An appropriate operating framework / guidelines shall be put in place, along with Risk / MO team, for such monitoring on ongoing basis. [...] #### - The Investment Committee shall approve / ratify proposals to use the services of any external service providers to support the investment team / Investment Committee in discharging its stewardship responsibilities. In case the Investment Committee engages an external agency, scope of services that it proposes to avail must be specified in the operating guidelines. [...] #### - Referral to Investment Committee: In the event of an actual/ potential conflict of interest, the investment team may consult with the Investment Committee to decide whether to vote or abstain from voting and also the manner of voting (if required) in relation to the resolution of the relevant investee company. The Investment Committee may refer an issue to the Audit Committee, if deemed necessary and appropriate. [...] #### - The Investment Committee shall address an actual/potential conflict of interest on a case-by-case basis. [...] Step 3: Escalation In case there is no progress despite the first two steps, the matter will be discussed at the Investment Committee of HDFC Life for further escalation to the Board of Directors of the investee company. If the Investment Committee decides to escalate, the communication to the Board of the investee company should elaborate on the concerns, the past requests for engagement with the management of the company, the past discussions and the agreed course of actions. Step 4: Reporting to regulators/authorities Only in exceptional cases, where the concerns relate to matters of public interest or public laws, if there is no response or no action taken by the investee company despite the escalations as mentioned earlier, The Investment Committee may decide to report to the relevant regulator, authority or any Government body or refer the matter to the insurance council as may be required.

**4.0** **MONITORING BY AUDIT COMMITTEE**

The Audit Committee of HDFC Life shall maintain an oversight on the voting decisions of HDFC Life. The decisions of the investment team to vote in favor of / or against a particular resolution or abstain from voting, and the reasons thereto, will be reviewed on a quarterly basis by the Audit Committee for compliance with the rules set out in the Stewardship Policy and the Voting Policy of HDFC Life.

The Investment Committee may also refer some proposed resolutions of the investee companies, to the Audit Committee in cases which give rise to an actual or potential conflict of interest, as outlined in the Stewardship Policy adopted by HDFC Life.

**b. ESG Governance Committee (Investments)**

The ESG Governance committee comprises of the Chief Investment Officer, Head of Fixed Income, Head of Research, Fund Manager of ESG Fund and dedicated ESG research analyst. The ESG Committee reviews and guides the investment team on integration of ESG factors in the Fund Management process and engagement with Investee companies.

The ESG Governance Committee meetings are held at least once in a quarter, and more frequently, if required, and take stock of the progress on ESG assessment and monitoring of investee companies. Following activities are undertaken in the review meetings:

i. Tracking ESG scores and rating movements of companies in the investment universe
ii. Progress on deliverables of international commitments like UNPRI
iii. Tracking and reporting the progress on engagement initiatives with investee companies
iv. Discussion on new ESG trends/regulations in the country and future actions for the committee

**c. Engagement with companies and managers under Stewardship Policy**

i. Stewardship

As per the 'Guidelines on Stewardship Code for Insurers in India' by the IRDAI, asset managers should monitor and engage with investee companies in order to protect policyholders' interest. This code acts as a guiding principle for asset managers to exercise their stewardship responsibilities benefiting companies, investors and the economy as a whole. At HDFC Life, in addition to voting, stewardship includes monitoring and engaging with investee companies on matters such as strategy, sustainability, performance, risk, capital structure, evolving regulatory frameworks and corporate governance, including culture and remuneration.

It is our endeavour to engage in purposeful dialogue with investee companies on the above matters as well as on issues that are the immediate subject of resolutions at general meetings. We recognise that asset managers like us, with day-to-day responsibility for managing investments, are well positioned to influence companies' long-term performance through stewardship. (Refer _to HDFC Life Stewardship policy for more details).)_

ii. Voting

Proxy voting is an important component of our engagement process. All voting decisions are assessed on their merit in the framework of a just, fair, equitable, sustainable outcome for the company's actions and business decisions. While we use proxy advisory services to help better understand the proxy materials and statements, all voting is carried out by analysts with prudence, in accordance with the applicable law and in discussion with the Chief Investment Officer as and when necessary

**d. Responsibility**

HDFC Life commits that all investments it makes, are consistent with this policy. The Chief Investment Officer bears the primary responsibility of ensuring the same.

The responsibilities of the CIO are as
- Policy commitment, revision and sign off on updates

- Communication of this framework to relevant parties and oversight on implementation

- Annual scan and review of the investment universe

- Determining course of action in case of specific ESG issues being raised about an investee company

The CIO may also raise any specific issues under the RI framework with HDFC Life's management Executive Committee (EC). Certain issues may also be referred to the Investment Committee of the Board under the overall stewardship responsibilities of the Committee.

**e. Review**

The investment team at HDFC Life incorporates the principles of RI in their functional responsibilities. The standards or levels of responses in implementation of these principles shall be reviewed by the CIO at regular intervals.