2021 ESG Annual Report


COMPANY: Phillips 66 MEETING DATE: May 12, 2021 PROPOSAL: GHG Reduction Targets OUR VOTE: For VOTE RESULT: 79.4%

OUR RATIONALE: Neuberger Berman believes that companies should consider the long-term impact of their business model and operations, and that all issuers must be able to identify key environmental risks to their business. We will generally support shareholder proposals asking for increased disclosure where our assessment finds that existing disclosure practices are significantly lagging behind recognized frameworks necessary for investors to assess these risks. Here, while the company currently does not have reduction targets for Scope 1 and 2 emissions, earlier this year it publicly stated that it plans to establish targets by the end of 2021. Overall, we believe there is opportunity for the company to strengthen its practices and disclosures pertaining to GHG emissions, such as establishing Scope 1 and Scope 2 reduction targets and interim targets, having these targets certified by the Science-based Targets initiative, and receiving third-party assurance for GHG emissions disclosure. While we recognize the company’s stated commitment to make progress, we believe support for the proposal is warranted given the opportunity for further improvement and to reinforce our support for the company’s intent to set reduction targets. OUTLOOK AND OUTCOMES: Since the vote, the company has adopted 2030 targets for its Scope 1, 2, and 3 emissions and has set a 2050 target for its Scope 1 and 2 emissions. OUR RATIONALE: Given the potential reputational impact of the use of company funds in relation to political processes and activities, Neuberger Berman will generally support shareholder proposals asking for disclosure and/or reports on this issue. Here, the company does not seem to maintain board-level oversight of political activities or a corporate political spending policy. Further, the company does not disclose information regarding its direct or indirect political contributions or its trade association memberships. As such, we believe enhanced disclosures are necessary to better inform shareholders’ evaluation of the company’s risks associated with these activities and to hold the board accountable accordingly. For these reasons, we intend to vote for the proposal. OUTLOOK AND OUTCOMES: We sent a letter to the board outlining our concerns regarding board oversight and transparency of political activities. We will continue to monitor progress. OUR RATIONALE: Neuberger Berman believes topics related to human capital are among the most significant risks and opportunities for companies. We believe equitable, inclusive, and diverse workforces are important elements of a company’s long-term success. We value transparency on workforce composition and information related to human capital policies, practices, and outcomes. There is limited disclosure on workforce composition, and where information is disclosed, it is often not comparable across companies. As such, we encourage U.S. companies to disclose their EEO-1 reports 1 as a starting point and provide supplemental information on their workforce composition and human capital management practices specific to the company. Here, while the company currently provides some disclosure on the gender and racial composition of its workforce, it does not disclose its EEO-1 report. As such, we believe support for this proposal is warranted. OUTLOOK AND OUTCOMES: In response to shareholder feedback, the company has enhanced its workforce reporting to include EEO-1 data.

COMPANY: Netflix, Inc. MEETING DATE: June 03, 2021 PROPOSAL: Political Contributions and Expenditures Report OUR VOTE: For VOTE RESULT: 82.3% COMPANY: Union Pacific Corporation MEETING DATE: May 13, 2021 PROPOSAL: EEO-1 Reporting OUR VOTE: For VOTE RESULT: 85.6%

1 The U.S. Equal Employment Opportunity Commission collects workforce data (EEO-1 data) from employers with more than 100 employees on an annual basis.


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