Givaudan : UK Pension Plan Implementation Statement

GIVAUDAN UK PENSION PLAN

YEAR ENDED 31 MARCH 2021

Givaudan UK Pension Plan

Annual Implementation Statement for the year ended 31 March 2021

October 2021

1. Background

On 6 June 2019, the Government published the Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations (the Regulations). The Regulations amongst other things require that the Trustees outlinehowtheyhaveensuredthatthepoliciesandobjectivessetoutintheirStatementofInvestmentPrinciples (SIP) have been adhered to over the course of each Plan year. This is the second Implementation Statement the Trustees have prepared and covers the year ended 31 March 2021.

2. Introduction

This document is the annual Implementation Statement (Implementation Statement) prepared by the Trustees of the Givaudan UK Pension Plan (theTrusteesandPlanrespectively) covering the Plan year to 31 March 2021. The purpose of this Implementation Statement is to:

set out the extent to which, in the opinion of the Trustee(SIPs) required under section 35 of the Pensions Act 1995, as amended, has been followed during the year;

detail any reviews of the SIPs the Trustees have undertaken, and any changes made to the SIPs over the year as a result of the reviews; and

describe the voting behaviour by, or on behalf of, the Trustees over the year.

SIPs:https://www.givaudan.com/media/corporate-publications

3. Review of, and changes to the SIPs

The Plan has two SIPs; one for the DB (and AVC) benefits and one for the DC Section. These SIPs were reviewed and updated during the Plan year, with revised versions being published as at September 2020, December 2020, January 2021 and February 2021. The changes in September 2020 reflected regulation with

financially material considerations, including Environmental, Social and Governance (ESG) considerations, and the extent to which these are taken into account in the selection, retention and realisation of investments;

the extent to which (if at all) non-ount in the selection, retention and realisation of inv estments; and undertakingengagementactivitiesinrespectoftheinvestments.

The changes in subsequent SIPs related primarily to the reorganisation of the Plan's investments to meet the Trustees' funding objectives and the purchase of a bulk annuity policy.

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GIVAUDAN UK PENSION PLAN

YEAR ENDED 31 MARCH 2021

4. Relevant activity during the Plan year ended 31 March 2021

June 2020

Training	Revised SIP requirements
DB	Reviewed asset performance and hedging robustness given 2020 COVID-19 impact to date. Reviewing ESG position Reviewed draft revised SIPs
DC	Review of L&G mastertrust proposition. Agreement to move to formal due diligence on bulk transfer.

October 2020

Training	None
DB	New SIP agreed (between meetings) Potential buy-in considerations Investmentconsultantobjectivesreviewedindetail CMA compliance statement planned
DC	New SIP agreed (between meetings) to proceed.

February 2021

Training	None
DB	Recap of buy-in transaction (between meetings) Discussion on residual assets Associated SIP amendments (draft rev iewed)
DC	Recap of transfer which happened on 6 January 2021.

5. Adherence to the SIPs

Overall the Trustees believe the policies outlined in the SIPs have been adhered to during the Plan year. The remaining parts of this Implementation Statement set out details of how this has been achieved for the DB and which are statements of fact.

Defined Benefits (DB) Section

In February 2021, the Trustees purchased a bulk annuity policy, which insures the members' liabilities. The insurance contract is an asset of the Plan and the pension liability remains with the Plan. With the exception of cash (or cash-like/liquidity) balances, and additional voluntary contributions, this is now the sole asset of the Plan.

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GIVAUDAN UK PENSION PLAN

YEAR ENDED 31 MARCH 2021

The Trustees have sought advice fromfrom the investment consultant demonstrating the actions taken under the fiduciary management agreement. This includes views on investment outlook and how these have fed into the investment strategy.

Up until 30 September 2020, the Trustees received investment reports each quarter from the investment managers which detailed information on performance, costs, stewardship and responsible investment.

The Trustees report on the risks associated with the Plan's inv estments annually in the inv estment risk disclosure report which accompanies the Report and Accounts. In this report, the Trustees monitor the risks associated with both the Defined Benefit section, focusing on market risk, credit risk, interest rate risk, inflation risk and other risks.

The Trustees' administration team at Aon monitor the cashflow requirements of the Plan on a regular basis.

The Trustees' stewardship policy

The relevant extract of the SIP covering the Scheme's voting and engagement policies for the period up until the assets were reorganised and the bulk annuity purchased was as follows:

The Trustees recognise the importance of their role as a steward of capital, promoting corporate responsibility and ensuring the highest standards of governance. The Trustees recognise that ultimately this w ill help to protect the financial interests of the beneficiaries of the Plan.

The Trustees review the stewardship activity of the investment managers on an annual basis to ensure the Plan's stewardship policy is being appropriately implemented in practice. The Trustees receive annual reports on stewardship activity carried out by their managers and these reports include detailed voting and engagement information from underlying asset managers, e.g. compliance with the UK Stewardship Code issued by the Financial Reporting Council.

The Trustees expect the investment managers to use their influence as institutional investors to ensure that underlying asset managers exercise the Trustees' voting rights in relation to the Plan's assets and report to the Trustees on stewardship by underlying asset managers as required.

The Trustees will engage with the investment managers as necessary for more information, to ensure that robust active ownership behaviors, reflective of their active ownership policies, are being actioned. This will take the form of reporting which will be made available to Plan members on request.

Where possible, the transparency for voting should include voting actions and rationale with relevance to the Plan, highlighting in particular those votes by the asset managers against management that were significant, where votes were abstained, or where voting differed from the policies of the Trustees. Where voting is concerned we would expect our underlying asset managers, to recall stock lending, as necessary, in order to carry out voting actions.

The Trustees may engage with their investment managers, who in turn are able to engage with underlying asset managers, investee company or other stakeholders, on matters including the performance, strategy, risks, social and environmental impact, corporate governance, capital structure, and management of actual or potential conflicts of interest, of the underlying investments made. Where a significant concern is identified, the Trustees will consider, on a case by case basis, a range of methods by which they would monitor and engage so as to bring about the best long-term outcomes for the Plan.

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ESG and EngagementAon Investments Limited (AIL)DB section fund manager

The following sections provide information on the activity of the Trustees' fund manager, covering the period up until the purchase on the bulk annuity policy in February 2021.

The Trustees' fiduciary mandate is managed by AIL who appoint underlying asset managers to achieve an ov erall target return.

AIL undertook a considerable amount of engagement activity over the period, some examples of which have been outlined within this statement. AIL held around 35 ESG specificdeep-div emeetings in 2020 predominantly covering the equity and fixed income managers that are invested in by AIL across all delegated engagementactivitiesundertakenduringcalendaryear2019,highlightingareasofimprovementanddiscussing manager strategy in the area of responsible investment (RI) moving forward. Meetings have progressed through the beginning of 2021.

Aon Solutions UK Limited (Aon) also actively engage with asset managers and this is used to support AIL in leading global asset managers (the manager) on behalf of many of their clients which inv est with the manager. This culminated towards the end of 2020 in a discussion with their Global Head of Stewardship with respect to commitment to publicly stated climate change goals. Discussions were held regarding the following:

voting in a manner consistent with their public pledges nor rhetoric on the importance of sustainability issues. The manager acknowledged that there was a disconnect between vote decisions made in the first half of 2020, but that they had markedly changed their voting policies in the second half of 2020, and reassured Aon that moving forward, vote decisions would better align with their stated positions on such ESG matters. Aon expect to see this reflected in voting actions by mid-2021.

Aon expressed concern that given the level of potential influence the manager had, the manager was unable to bring shareholder resolutions to those companies with which it had reason to engage. Reasons for this are regulatory and concern its investor classification status. The manager acknowledged Aon's concern and agreed to follow up with further detail. While its situation has not yet changed, it is possible that regulatory restrictions may be eased in the future allowing the manager to use shareholder resolutions as a tool. The manager has since stated its intention to use its vote for shareholder resolutions brought by other organisations, to greater effect.

The manager has since provided further information on how they are updating their policies in a manner consistent with their strategy of intensifying engagement on sustainability. For example, in areas such as the transition to the low carbon economy; div ersity, equity and inclusion; v oting on shareholders proposals.

AonwelcometheimprovedstanceonESGissuesfromthemanagerandtheirproactiveupdatingoftheirpolicies to more closely align with their responsible investment goals. Aon will continue to monitor and engage with the manager, scrutinizing their voting and engagement actions. Aon is encouraged that the manager plans to strengthen their influence with invested companies to better effect, especially the changed stance around supporting appropriate shareholder proposals.

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GIVAUDAN UK PENSION PLAN

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Stewardship activitiesunderlying managers

Over the period, the Plan was invested in a number of equity, fixed income and liquid alternative funds. This section provides an overview of the voting (where applicable) and engagement activities of some of the most material managers over the relevant period.

For the DB Section the Plan invested in the above asset classes via the Managed Growth Strategy and in fixed income funds via the Low Risk Bonds Strategy managed by AIL.

Voting and Engagementequity investments

Over the year, the Plan was invested in the AIL Managed Growth Strategy Fund. The material equity investments held in this strategy over the year were:

Legal and General Investment Management (LGIM) Multi Factor Equity Fund

BlackRock Emerging Markets Equity Fund

The Trustees consider a significant vote broadly as a vote which the respective manager deems most significant to the Plan, or a vote where more than 15% of votes were cast against management.

LGIM Multi Factor Equity Fund

Voting

LGIMmakeuseoftheInstitutionalShareholderServices(ISS)proxyvotingplatformtoelectronicallyvoteand augment their own research and proprietary environmental, social and governance (ESG) assessment tools, but do not outsource any part of the strategic decisions. They have put in place a custom voting policy with specific instructions that apply to all markets globally, which seek to uphold what they consider to be minimum best practice standards all companies should observe. Even so, LGIM retain the ability to override any voting decisions based on the v oting policy if appropriate, for example, if engagements with the company hav e prov ided additional information.

Voting Example

In September 2020, LGIM voted against a remuneration policy put forward by an investee company Pearson.

Pearson issued a series of profit warnings under its previous CEO. Despite this, shareholders have been continuously supportive of the company, believing that there is much value to be gained from new leadership and a fresh approach to their strategy. Howev er, the company decided to put forward an all-or-nothing proposal meeting (EGM) was seeking shareholder approval for the grant of a co-investment award, an unusual step for a UK company, yet if this resolution was not passed the company confirmed that the proposed new CEO would not take up the CEO role.

This is an unusual approach and many shareholders felt backed into a corner, whereby they were keen for the company to appoint a new CEO, but were not happy with the plan being proposed. Howev er, shareholders were not able to vote separately on the two distinctly different items, and felt forced to accept a less-than-ideal remuneration structure for the new CEO.

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