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CompanyEngagementOur engagement program is a naturalextension of our investment process.When we identify a practice or decisionwe believe will have negative long-termfinancial repercussions for our clients,we will engage with the company. In ourexperience, engagement is most effectivewhen it is directly led by our portfoliomanagers in the form of formal writtencommunication, meetings and calls withmanagement or the company’s board.companies. This affords us, in mostcases, access to company managementteams and board members.We believe our responsibilities as diligentinvestors do not cease with the decisionto purchase a security. We maintainregular dialogue with the managements ofissuers represented across our portfolios– and where we find areas of concern, wemake those concerns known.Engagement, proxy voting activities,and assessment of a broad range ofinvestment considerations—including ESGissues—are integrated into T. Rowe Price’sinvestment processes. Based on our viewthat these issues are important investmentconsiderations, our engagement programis driven by our investment professionalsand usually focused on a matter materialto the investment case. It is conducted by§§Who represents shareholders on acompany’s board? Is the board astrategic asset for the company?§§Which factors drive the executivecompensation program and,therefore, the incentives ofmanagement?§§Thanks to the trust our investment clientshave placed in us, T. Rowe Price isinvested in many of the world’s largestGenerally, we have three possible objectives when initiating engagement:1Obtain informationfrom an issuer toassist us in makinginvestment orvoting decisions.162Share our perspectivewith an issuer ona matter relating tocorporate governanceor sustainability.3How robust are shareholders’ rightsat the company?our portfolio managers with the supportof our industry-focused analysts andour in-house specialists in corporategovernance and sustainability to leveragetheir expertise on specific companies,industries, or issues of an environmental,social, or governance nature. Ourengagement approach is driven byinvestment issues such as:§§How well is the company managingits environmental risks, humancapital, facilities, stakeholderrelations, and long-term access tocritical resources?§§Are there ESG risks that couldnegatively affect the interests ofbondholders during the periodbefore the instrument matures?Occasionally we participate with other investors in industry-level initiatives aimed atimproving disclosure or business practices on a market-wide level. However, the centralfocus of our engagement program is at the company level. We believe this has the highestimpact because it is aligned with our core investment approach: active management rootedin fundamental investment analysis.Accommodate anissuer’s request toshare information orperspective with us.17

Proxy VotingProxy voting is a critical component ofour corporate governance approach,and we offer our clients a high degreeof visibility over the votes we cast ontheir behalf. Disclosure of our votingguidelines and record can be found onour corporate website.Shareholder proposals relating toenvironmental or social concerns havebecome more frequent in recent years.18We take a case-by-case approach toanalysing these proposals, leveragingresearch reports from our external proxyadvisor, company filings and sustainabilityreports, public research from otherinvestors and non-governmentalorganisations, our internal industryresearch analysts, and our in-housesustainability experts. Generally, wesupport proposals that stand to improve acompany’s business model.Exclusion ListsAll portfolios are subject to sanctionrelated exclusions. At any point in time,a portfolio may be prohibited frominvesting in certain sovereign or corporateinstruments associated with targeted USor international sanctions.In addition, we have a limited set ofexclusions across our investmentportfolios. For example, we have a globalexclusion list of issuers with significantbusiness ties to the governmentof the Republic of Sudan and itsconnection to human rights abuse. Inour European and Canadian portfolios,we maintain an exclusion policy oncertain issuers with direct exposure tothe ongoing manufacture, production,or assembly of anti-personnel landmines, cluster-munitions systems andincendiary weapons.In our Australian portfolios, we maintainan exclusion policy on companies withdirect exposure to tobacco production.

ESG OversightOverall oversight for ESG integration isheld at the senior management level –specifically, Head of Investments andGroup Chief Investment Officer RobSharps, and co-head of Global EquityEric Veiel. Our dedicated, in-house ESGresources report directly to the seniormanagement level, with the Director ofResearch, Responsible Investing, MariaElena Drew, reporting to Mr. Sharps,and the Head of Governance, DonnaAnderson, reporting to Mr. Veiel.The Directors of Research for equity andfixed income have oversight of investmentanalysts and how they implement ESGfactors in their investment process,which is a component of each analyst’sannual performance review. In assessingan analyst’s implementation of ESGfactors, the Directors of Research willreceive input from Director of Research,Responsible Investing and Head ofGovernance.Our analysts and portfolio managers areresponsible for implementation. It is theanalyst’s responsibility to incorporate20ESG risk analysis into the investmentdecision; he or she will consider the fullspectrum of relevant risks in makingan ultimate recommendation about asecurity. Depending on the strategy,portfolio managers may apply extralayers of implementation by screeningtheir portfolios for ESG issues on aperiodic basis. For their part, our RIand Governance subject-matter expertsprovide research, tools and support to ourglobal team of investment analysts andportfolio managers.These specialists have accountabilityfor implementing ESG factors into theinvestment process via our regularperformance-review process.Additionally, the Board of Directors ofT. Rowe Price has oversight on ESG.The Board will receive an update onESG activities at T. Rowe Price on anannual basis.ESG TrainingEvery new analyst who joins T. RowePrice is trained in responsible investingand corporate governance as partof an in-depth, multi-day departmentorientation. In addition to this formaltraining, discussions about ESG factorsare a routine part of the dialogue betweenour analysts and portfolio managers,particularly when a new investment isunder consideration.On top of our new analyst training, wehold forums with investment professionalsacross the firm to explore the integrationof environmental, social and governancefactors in the investment process.21

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Frequently AskedQuestionsHow do you factor for longer-term ESG themessuch as climate change?The implications of climate change arecatalysing the rapid evolution of regulationand consumer demand around the world.Our investment professionals capture theimpact of climate change as part of theirESG analysis, which is embedded in ourinvestment process.also helping to reinforce the notionthat climate-related risk assessment isa priority. We believe companies thatengage in long-term strategic planning,including in-depth analysis of ESGfactors such as climate change, benefitfrom that experience. Looking inward toassess their own mission and purpose– to think about how the competitivelandscape is evolving over long periodsof time and consider how changes inthe broader community might affectthe company – are processes that helpalign the company’s direction with theinterests of its shareholders. Furthermore,when a company’s radar is tuned intolong-term climate and societal shifts,it may be better positioned to createnew opportunities.We believe speaking with companymanagement and other stakeholdersabout climate change is an effectiveway to gather valuable investmentinsights about management’s processfor assessing long-term risks, whileEngagement with managementteams or board members on climatechange is usually conducted as partof a multifaceted discussion on manyinvestment considerations for thatparticular company but occasionallyWe believe long-term ESG issues,including climate change, can influenceinvestment risk and return and thereforeincorporate them into our fundamentalinvestment analysis. We executescenario analysis, which includes factorsrepresenting the investment impacts offuture environmental and social trends.The type of factors analysed in ourscenario analysis will vary by industryand region.24Climate ChangeWe believe climate change is one long-term ESG issue that caninfluence investment risk and return. The implications of climatechange are changing regulations and consumer demands aroundthe world. Our investment professionals capture the impact ofclimate change through many lenses as part of the investmentprocess. For example, climate change factors are capturedin RIIM (our proprietary RI analysis) in several categories:supply chain, operations, end-product and ethics. Additionally,climate change factors are frequently incorporated in ouranalysts’ financial forecasts. We believe speaking with companymanagement and other stakeholders about sustainability topicsis an effective way to gather valuable investment insights aboutthe management team’s process for assessing long-term risks,as well as helping to reinforce the notion that ESG-related riskassessment is a priority.could focus only on climate changeimplications. Given that T. Rowe Pricehas predominantly actively managedportfolios, we have the option not toinvest in a company with onerous climatechange risk.As a result, our engagements on specificESG issues like climate change tend totake the form of in-depth discussions,where we believe our engagement canbe effective.25

Do you incorporate the UN Global Compact Principlesand/or UN Sustainable Development Goals (SDGs) inyour investment process?External sources, such as the UN GlobalCompact Principles and UN SustainableDevelopment Goals (SDGs), help usunderstand environmental and societalpressure points. We believe these arerelevant to the investment processas companies contributing to thesepressures are likely to face greater socialscrutiny over time. This could come in theform of more regulatory burdens, taxation,litigation and/or consumer dissatisfaction.Conversely, companies that act as‘solutions providers’ are likely to havemuch more sustainable business models.The UN Global Compact Principlesoverlap with many input factors thatdrive our proprietary RIIM. For example,in our model, the management ofhuman capital is assessed in manyways, including supply chain analysis forhuman rights violations, labour-related26incidents, and metrics such diversity.From an environmental perspective, weassess the environmental performanceof the company on many metrics,including its energy and emissions, water,waste, outputs and targets, sustainablesourcing of raw materials, and endproduct sustainability and impact onthe environment. Finally, anti-corruptionis factored into the ethics portion of ourmodel, allowing us to not only assessthe programs in place but also highlightthe track record of the company. Webelieve taking these RI input factorsinto consideration alongside companyfundamentals allows us to make a fullyinformed investment decision.The UN Sustainable Development Goals also overlap with many input factors:27

Are you involved in collaborativeengagement activities?We selectively take part in collaborativeinitiatives. We are generally affordeddirect access to the management ofcompanies in our clients’ portfolios,but we consider collaboration with other28investors on engagement initiatives ona case‑by‑case basis. T. Rowe Price hasjoined or led the following initiatives tobring investors together for purposes ofadvocacy or engagement.OrganisationDescriptionStatusAsia Corporate GovernanceAssociation (ACGA)Pan-Asian association for institutionalinvestorsMemberAssociação de Investidoresno Mercado de Capitais(AMEC)Association of minority investors in Brazil MemberCouncil of InstitutionalInvestors (CII)U.S. association of institutional investors,corporate issuers, and asset managersAssociate MemberInvestor CDPAdvocacy group for better disclosure ofcarbon emissionsSignatoryInvestor StewardshipGroup (ISG)Investors advocating for coregovernance principles for U.S. marketparticipantsFoundingMemberJapan Stewardship CodePublic commitment to upholdstewardship principlesSignatoryPrinciples for ResponsibleInvestmentGlobal initiative for responsibleinvestmentSignatoryUK Investor ForumCollaborative engagement associationfor investors in UK companiesFoundingMemberUK Stewardship CodePublic commitment to upholdstewardship principlesSignatory29

Important InformationThe specific securities described above donot necessarily represent securities that werepurchased, sold or recommended and noassumptions should be made that the securitiesdiscussed were or will be profitable. All analysisexamples are shown for illustrative purposes only.DIFC – Issued in the Dubai International FinancialCentre by T. Rowe Price International Ltd. Thismaterial is communicated on behalf of T. RowePrice International Ltd. by its representative officewhich is regulated by the Dubai Financial ServicesAuthority. For Professional Clients only.This material is being furnished for generalinformational purposes only. The material doesnot constitute or undertake to give advice of anynature, including fiduciary investment advice,and prospective investors are recommended toseek independent legal, financial and tax advicebefore making any investment decision. T. RowePrice group of companies including T. 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and portfolio managers. Our research analysts incorporate ESG factors into company valuations and ratings, while our portfolio managers balance the ESG factor exposures at a portfolio level. Our in-house ESG specialists support the investment team through all stages of the investment process: identification, analysis and integration.