Aegon N : Responsible Investment Report 2021

RESPONSIBLE INVESTMENT REPORT 2021

Our progress on ESG integration, active ownership and solutions

Aegon Asset Management is the global investment management brand of Aegon N.V. See disclosures for more detail. For institutional and professional investor use only.

Table of contents

Responsible investment at Aegon AM Foreword

Introduction

Key developments

Enhancing the ESG integration process in sovereign bond investing

Sustainable Diversified Growth Global Sustainable Real Estate Active ownership

Engagement highlights

Case studies

Long-term value generation

Sustainability research

Compliance with standards

Voting

Appendix

1

2

3

4

5

7

9

10

11

12

13

16

17

19

21

This Active Ownership Report describes Aegon AM's Responsible Investment team and its approach to active ownership within Aegon AM's fixed income, equity, and multi-asset solutions investment platforms. The activities described herein apply specifically to corporate issuers but do not encompass sovereign issuers, bank loans, or scrutinized debt, among others. Similarly, while this report generally describes our active ownership approach, each affiliate's specific implementation within Aegon AM will vary based on the specific strategy or asset class specialization. Additionally, each client has unique needs and requirements within their mandate and certain of our clients may have stated expectations different from the activities described herein. For that reason, not every capability within Aegon AM's fixed income, equity, or multi-asset solutions platform necessarily utilizes the approach described herein. Information specific to each capability within Aegon AM is available upon request.

Please refer to the Disclosures pages for additional important information.

Responsible investment defined

Responsible investment (RI) is an umbrella term that covers various tools and approaches to incorporating environmental, social and governance (ESG) considerations into investment decision-making processes. It may include ESG integration and active ownership as well as dedicated, RI-focused capabilities. Related terms may include sustainable or ESG investing.

Table of Contents

Responsible investment at Aegon AM

€177.6 billion

($202 billion)

AuM in responsible investment solutions1

596

engagements2

2,963

company meetings voted on3

17

professionals in a dedicated Responsible Investment team

A+

PRI RI strategy and governance rating for 20204

6th/75

ShareAction RI program5

100/100

Sustainalytics RI policy and program (assessment of parent company, Aegon N.V.)6

For over 30 years, we have built a comprehensive responsible investment approach consisting of three pillars: ESG integration, active ownership and solutions.

With our dedicated Responsible Investment team (RI team), we are continually expanding ESG integration across investment strategies, strengthening our active ownership efforts and expanding our client-centric responsible investment strategies.

We consider it a privilege and duty to help our clients pursue better long-term outcomes while contributing to sustainable capital markets and impactful economic activities. We are proud to report that our responsible investment program continued to receive high ratings and rankings by key industry organizations last year.

Looking ahead, we remain committed to responsible investing and aspire to drive the industry forward by promoting best practices for the potential benefit of our clients, the industry and society at large.

1Aegon Asset Management, as of December 31, 2021. Assets under management/advisement excludes joint ventures. Total responsible investment solutions includes €160.5 ($183) billion of strategies with exclusions, €10.2 ($12) billion of best-in-class strategies, €2.9 ($3.3) billion of sustainability-themed strategies as well as €4.1 ($4.6) billion of impact investments. Exclusions include assets primarily managed for Aegon AM affiliates subject to a global exclusion list. The impact of the exclusion list will vary depending on the asset class and may not materially affect the implementation of every strategy.

2Aegon Asset Management, December 31, 2021.

3This figure represents all votes, including those on behalf of clients according to their own policy.

4PRI did not update assessment ratings in 2021. A new rating is expected in 2022. As of 2020, approximately 29% of signatories received an A+ score for PRI strategy and governance module.

5As of 2020. ShareAction conducted a survey ("Point of No Returns", March 2020) of 75 large asset managers. 6As of 2020. Based in whole or in part on Aegon Asset Management's RI program, approximately 23% of 1,269 participants received a score of 100/100 for their responsible investment policy and 23% of 1,181 participants received a score of 100/100 for their responsible investment program.

Responsible investment products and services may vary regionally. Refer to disclosures for important information.

Responsible investment at Aegon AM

Foreword

Bas NieuweWeme, CEO

The last year proved to be another challenging period as we all continued to live with Covid-19. However, the rollout of the vaccination programs worldwide brought hope of a return to some measure of normality. Despite the emergence of the Delta and Omicron variants, economies began to reopen, and we face a far more optimistic future as we look forward to the rest of 2022.

The pandemic forced the world to adapt to the changing environment more quickly than anyone could have expected, with people pulling together for the greater good. This was particularly visible in medical and care professionals, as well as with essential workers who continued to selflessly put their own wellbeing at risk. At an economic level central banks across the world moved rapidly to dampen the economic repercussions of the pandemic.

Covid-19's disruption to the world's predictable cycles caused a collective reassessment of the normalcy and routine of our daily lives with priorities shifting. It has also seen investors begin to place greater emphasis on the importance of environmental, social and corporate governance issues.

At Aegon Asset Management (Aegon AM) our daily life may look a little different, but our commitments remain the same: to deliver the highest quality investment solutionsto our clients; pursue competitive long-term results through active investment management; and provide our employees with fulfilling careers, financial stability, and a safe, inclusive and diverse workplace.

Covid-19's disruption to the world's predictable cycles caused a collective

As part of our commitment to inclusion reassessment ofand diversity we aspired to have 30% of senior management roles globally filled by women by the end of 2020. We beat that target and hit 33% in 2021. However, we don't want to stop there. We are continuing to push for progress, and our aspiration is to have women comprising 35% of the firm's senior management positions by the end of 2022.7

Underpinning these commitments is our determination to expand our ESG capabilities. COP26, held in Glasgow during October and November last year, heightened the world's focus on these factors, along with the challenges and opportunities they present for the future.

I am proud of the progress we have made in our commitments to responsible investing. Over the past year, Aegon AM UK joined the Net-Zero Asset Managers Initiative; the Aegon Global Sustainable Equity product8 won a prestigious award in the United Nations Conference of Trade and Development (UNCTAD) Sustainable Global Fund Award category; and we have launched various sustainable products, including Global Sustainable Sovereign.9 All of these achievements showcase our commitment and the ways in which we are constantly striving to improve.

Responsible investing is embedded in our rich heritage at Aegon AM, and we believe it has a bright future. We aspire to drive the industry forward by promoting best practices for the benefit of our clients, the industry and society at large.

the normalcy and routine of our daily lives with priorities shifting. It has also seen investors begin to place greater emphasis on the importance of environmental, social and corporate governance issues.

7We are committed to progressing in all areas of I&D, but due to privacy restrictions in certain regions, we are unable to share more global statistics.

8As of 10/20/21. The award was given for the management of a UCIT fund managed by Aegon AM UK and is not available to US investors. Aegon AM UK offers a variety of strategies to Institutional Investors which may be accessed through a segregated account. All strategies offered by Aegon AM UK are subject to market risk including loss of principal. The UNCTAD Sustainable Fund Award recognize companies' commitments to SDG Funding. Winners were selected from more than 780 sustainable funds that met multidimensional sustainability criteria while outperforming their respective benchmarks. Four joint winners were chosen in the Global Sustainable Fund Category. No fee was paid to UNCTAD.

9Advised or sub-advised by Aegon AM NL. Not all products are available to all investors or in all jurisdictions. Certain capabilities may not be open to new investors.

Foreword

Introduction

Brunno Maradei, CFA, Global Head of Responsible Investment

Growth and interest in responsible investing continued as we all faced up to the impact we are having on our planet.

A focal point for much of this interest was COP26 held in Glasgow in November, as world leaders and delegates gathered to assess the impact of climate change and agree on measures aimed at limiting its damage.

Many found the outcome disappointing following lack of agreement over how to tackle the issues faced. But some hope was found in the reaction and clear collaboration of many smaller organizations and groups that aim to help fight climate change.

Further hope for a brighter future was offered by the mass rollout of the various Covid-19 vaccines across the world. This allowed a return to some normality and for economies to begin reopening and markets to start recovering. One by-product of this was inflation, which at first appeared transient but is now proving stickier than first thought.

As we return to some semblance of our regular routines, I have no doubt the pandemic has changed the way we spend our time and money. But other things remain unchanged such as the continued migrant crisis, which continues to underline the importanceof meeting the UN's Sustainable Development Goals.10

These events lead us to an inescapable conclusion: environmental, social and governance (ESG) issues are here to stay and will continue to influence societies, markets and valuations. This is why at Aegon AM, we continue to pursue our goal of capturing ESG value

ESG issues are here to stay and will continue to influence societies, markets and valuations. This is why at Aegon AM, we

and risk, while aiming to contribute to a continue to pursue ourmore sustainable world.

In 2022, we look forward to continuing our responsible investment journey by launching innovative strategies and further developing our ESG integration processes, particularly in more challenging asset classes where ESG information is difficult to procure. We will also continue to seek to achieve the greatest impact for our institutional investors, as active and engaged owners of corporate balance sheets. The coming year will surely bring both challenges and opportunities, but we remain committed to providing a more sustainable future for our clients.

goal of capturing ESG value and risk, while aiming to contribute to a more sustainable world.

10The Sustainable Development Goals (SDGs) are a collection of 17 interlinked global goals designed to be a "blueprint to achieve a better and more sustainable future for all." The SDGs were set up in 2015 by the United Nations General Assembly and are intended to be achieved by the year 2030.

Introduction