HDFC Asset Management Co Ltd

Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent [...] The Company may share its expertise to help in the formulation of public policy, but it does not directly engage in advocacy activities. The Company actively engages in investor education programmes for mutual funds in line with AMFI guidelines. Additionally, the senior leadership team takes active part in various committees of AMFI and SEBI aimed at spreading financial literacy, increasing investor awareness, among others. Also, the Company, through AMFI, has advocated various governance, administration, economic and educational reforms.

**c)** **Stewardship/Engagement:**\n\nAs active managers, HDFC AMC is committed to exercising its role as the steward of capital in accordance with applicable laws and has adopted the Stewardship Code, in line with regulatory guidance. The Company has a stewardship committee to ensure that there is an effective oversight of all stewardship activities. The principles espoused in the Stewardship Code govern aspects of fund management activities like: monitoring of investee portfolio companies; its engagement with investee companies; voting on resolutions of the investee companies; and the disclosures of proxy voting.\n\nBased on meaningful threshold investment, the analyst shall monitor and actively engage with the investee companies on various topics such as executive compensation, dividend distribution policies, capital allocation, related party transactions, ESG strategy & implementation, long term ESG targets, ESG integration in risk management, etc. The aim of engagement is not only to improve ESG integration to limit risks, but also improve the impact of the organization's business on environment and society at large. The analyst may also engage with the management teams of investee companies on periodic or need basis and prioritize our engagement based on the size of our investment and the exposure in the investee company. The analyst may give companies reasonable timeframe to the investee company to enhance its ESG practices; and if requisite improvement is not observed then analyst may consider divesting.\nThe analyst may also write to the board of directors of the investee company to escalate concerns in case of any wrongdoings of its management.\nThe analyst may plan its engagements suitably to ensure maximum effectiveness depending on the nature and type of investment.\n\n**d) Voting**\n\nHDFC AMC considers shareholder voting as an important shareholder right and a valuable tool in the engagement process. It shall endeavor to vote on all resolutions of investee companies, which are critical for protecting and enhancing the interests of investors.\n\nThe Company has a Voting Policy with guidelines to ensure that they vote in the best interest of their clients. These voting guidelines are designed with an intent to promote accountability of the management and Board of Directors of the investee companies towards its shareholders and to encourage investee companies to adopt best corporate governance practices. The Company may vote against shareholder resolutions it they affect the interests of minority shareholders.\n\nThe Company may also engage proxy voting advisory services from reputed external service providers to help analyze the resolutions, proxy materials and statements of the investee company.\n\n**v.** **ESG Governance & Resources:**\n\nThe Company has an ESG oversight group comprises of the Chief Investment Officers/Head - Equity and Fixed Income, the ESG Analyst, the Chief Risk Officer along with the Managing Director & Chief Executive Officer.\n\nThe ESG Oversight group shall meet at-least once a year to review and provide guidance to the investment team on various aspects of ESG integration and engagement with investee companies including the responsible investing process.\n\nThe investment team is responsible for monitoring/evaluating the companies on various ESG parameters.\n\nThe Company shall take cognizance of the changing regulatory requirements and ensure appropriate actions to guide the investment process, engagement, voting and performance monitoring of the investee companies.

**c)** **Stewardship/Engagement:**\n\nAs active managers, HDFC AMC is committed to exercising its role as the steward of capital in accordance with applicable laws and has adopted the Stewardship Code, in line with regulatory guidance. The Company has a stewardship committee to ensure that there is an effective oversight of all stewardship activities. The principles espoused in the Stewardship Code govern aspects of fund management activities like: monitoring of investee portfolio companies; its engagement with investee companies; voting on resolutions of the investee companies; and the disclosures of proxy voting.\n\nBased on meaningful threshold investment, the analyst shall monitor and actively engage with the investee companies on various topics such as executive compensation, dividend distribution policies, capital allocation, related party transactions, ESG strategy & implementation, long term ESG targets, ESG integration in risk management, etc. The aim of engagement is not only to improve ESG integration to limit risks, but also improve the impact of the organization's business on environment and society at large. The analyst may also engage with the management teams of investee companies on periodic or need basis and prioritize our engagement based on the size of our investment and the exposure in the investee company. The analyst may give companies reasonable timeframe to the investee company to enhance its ESG practices; and if requisite improvement is not observed then analyst may consider divesting.\nThe analyst may also write to the board of directors of the investee company to escalate concerns in case of any wrongdoings of its management.\nThe analyst may plan its engagements suitably to ensure maximum effectiveness depending on the nature and type of investment.\n\n**iv.** **ESG Governance & Resources:**\n\nThe Company has an ESG oversight group comprises of the Chief Investment Officers/Head - Equity and Fixed Income, the ESG Analyst, the Chief Risk Officer along with the Managing Director & Chief Executive Officer.\n\nThe ESG Oversight group shall meet at-least once a year to review and provide guidance to the investment team on various aspects of ESG integration and engagement with investee companies including the responsible investing process.\n\nThe investment team is responsible for monitoring/evaluating the companies on various ESG parameters.\n\nThe Company shall take cognizance of the changing regulatory requirements and ensure appropriate actions to guide the investment process, engagement, voting and performance monitoring of the investee companies.

The Code is approved by the Board of Directors of HDFC AMC and HDFC Trustee Company Limited, Trustee to HDFC MF ("HDFC Trustee") and has been effective from July 01, 2020. With effect from April 16, 2021, the Board has authorized the Stewardship Committee[1] (the "Committee") to ensure that there is an effective oversight of stewardship activities and/or carry out any changes in the Code followed by ratification of such change(s) by the Boards of HDFC AMC and HDFC Trustee. [...] The Committee is also entrusted with the power to engage or use the services of any external service providers to support the Investment team in discharging its stewardship responsibilities. In case the Committee engages an external agency, scope of its services will be specified along with the mechanism to ensure that in such case, stewardship responsibilities are exercised properly and diligently. [...] The Committee will also be responsible for reviewing the code every year and / or whenever any changes are to be incorporated in the Code due to any amendment in the guidelines by SEBI for mutual funds in India or as may be felt appropriate by the Committee and recommend the same for approval/ratification of the Boards of HDFC AMC and HDFC Trustee. [...] A training program shall be formulated for training of Investment team and Committee explaining the responsibility under the Code along with amendments, if any. The Committee is empowered to decide or amend the frequency and modalities of training under this Code. Training will be conducted at periodic intervals, for the personnel involved in implementing the Stewardship Principles. This may be done through external agency or internal team presentations including sharing of reading materials, holding internal/external sessions, etc.