KMUKS_NR110_2021

Strictly Confidential: Only for the use of certain types of investment professionals

including accredited investors, qualified purchasers and financial institutions. Not for the

use of retail investors

GovernanceSocialEnvironmental

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Top Global Risks in Terms of Likelihood | World Economic Forum 2012–2021

Source: World Economic Forum Global Risks Perception Survey 2020, Global Risk Reports published 12th January 2021. Note: Global risks may not be strictly comparable across

years, as definitions and set of global risks have evolved with new issues emerging on the 10-year horizon. Some global risks have been reclassified: water crises and income

disparity were recategorized as societal risks in the 2015 and 2014 Global Risks Reports, respectively. Historical trends are not a guide to future trends

This increase in the likelihood of environment-oriented risks in the 21st century is influencing companies to adopt a standard

cohesive with the ESG framework

From 2012-2021, economic risks relatively declined whereas technological & environmental risks have significantly increased

Extreme weather Climate action failureHuman environmental

damageInfectious diseases Biodiversity loss

Digital power

concentrationDigital inequality

7th6th1st 2nd 3rd 4th 5th

2021

1st 2nd 3rd 4th 5th

2020 Extreme weather Climate action failure Natural disasters Biodiversity lossHuman-made

environmental disasters

2019 Extreme weather Climate action failure Natural disasters Data fraud or theft Cyberattacks

2018 Extreme weather Natural disasters Cyberattacks Data fraud or theft Climate action failure

2017 Terrorist attacksExtreme weather Involuntary migration Natural disasters Data fraud or theft

2016 Involuntary migration Extreme weather Climate action failure Interstate conflict Natural catastrophes

2015 Interstate conflict Extreme weatherFailure of national

governanceState collapse or crisis Unemployment

2014 UnemploymentIncome disparity Extreme weather Climate action failure Cyberattacks

2013 Income disparity Fiscal imbalancesGreenhouse gas

emissionsWater crises Population ageing

2012 Income disparity Fiscal imbalancesGreenhouse gas

emissionsCyberattacks Water crises

Economic

Environmental

Geopolitical

Societal

Technological

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What is ESG investing?

ESG Investing is

comprehensive approach that

integrates the Environmental,

Social & Governance factors

into investment analysis and

decision making.

Investing based on ESG

framework is a desirable add-

on that quantifies the

qualitative impact

of business.Governance

Deals with a company’s

leadership, executive pay, audits,

internal controls and

shareholders right

Environment

Criteria looks at how a company

performs as a steward of the

nature environment

Social

Criteria examine how a

Company manages relationship

with its employees and

stakeholders

Factors

Carbon Emissions

Waste management

Water management

Biodiversity

Climate change

Material sourcing

Human rights

Diversity

Communities

Health and safety

Labour management

Employee well-being

Board

Ownership

Remuneration

Pay

Accounting

Shareholder treatment

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Risk Management – Regulatory updates and trends

ECB: Release Guide on Climate

related and environmental risks in

the supervision of banking sector

Q4 2020. EU wide stress testing

EBA: Integration of ESG risks in

SREP and Scenario Analysis,

Stress testing and Prudential

framework 2022-23

UK

TCFD1 regulation, 2021

CBES to include financial

risks from climate risk, PRA

supervisory statement

Hong Kong

Common assessment

framework on green &

sustainable banking.

HKMA climate stress

testing exercise for the

largest banks underway

Philippines

Circular around

Environmental & Social

Risk Management

(ESRMS) issued for

comments with enhanced

guidelines including

integration with ICAAP

Singapore

MAS: Further guidance on

expectations of FIs and

expected to conduct stress

testing by end of 2022

SGX: proposes mandatory

TCFD1 disclosures for

financial year beginning 2022

Japan

JFSA: TCFD1 Coalition, climate stress

test to be conducted through to June

next year (2022) on top 3 Banks and top

3 non-life insurers as pilot

Thailand

Guidelines for

responsible lending

from Bank of

Thailand and the

bankers’ association

Malaysia

BNM in coordination with

JC3, issued final set of

guidance and taxonomy.

Further VBIAF sector

level guidance expected

YE 2021

Australia

Climate

Vulnerability

Assessment (CVA)

of top 5 banks with

results expected

early next year

New Zealand

Mandatory TCFD1

disclosures under

the financial

reporting act –

comply or explain

India

SEBI introduced

BRSR2 in replacement

of BRR3; provides

inter-operability of

reporting (such as

GRI4, SASB5, TCFD1,

Integrated Reporting)

Source: Moody’s, The Securities and Exchange Board of India (SEBI). 1Task Force on Climate-Related Financial Disclosures, 2Business

Responsibility and Sustainability Reporting, 3Business Responsibility Report, 4Global Reporting Initiatives, 5Sustainability Accounting Standards Board

Indonesia

Public companies & FIs required to

submit sustainability report & sustainable

finance action plans as per the FSA

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Regulatory changes for IndiaESG disclosure score on a rising trajectory and narrowing with global benchmarks

Expected to bring in greater transparency through disclosure of material ESG-related information

National Guidelines on

Responsible Business Conduct

(NGRBC)

Principles form part of Section C of BRSR

• Ethical nature of business

• Environmental restoration

Business Responsibility

Report (BRR)

Replacement

Source: Edelweiss Research, EY India, Vinod Kothari Consultants. 1MCA – Ministry of Corporate Affairs, 2TCFD – Task Force on Climate-Related Financial Disclosures

NGRBC: Alignment with UNGPs,

UN SDGs, Paris Agreement on

Climate Change etc.

P1: Governance, Integrity,

Transparency

P2: Sustainable and Safe

Processes

P3: Employee Well-being P4: Respect, Responsive to Stakeholders

P5: Respect, Promote Human

Rights

P6: Respect, Protect, Restore

Environment

P7: Responsible Public Policy

Advocacy

P8: Inclusive Growth, Equitable

Development

P9: Consumer Engagement, Value

Business Responsibility and Sustainability

Reporting (BRSR)

• 140 questions – 98 essential, 42 leadership

• Provides for inter-operability of reporting such as GRI,

TCFD2 etc.

Section A: General

disclosures

About the entity

Section B: Management

and process disclosures

About management

approach

Section C: Principle-wise

performance disclosure

About each principle

Essential

Compulsory

Leadership

indicatorsVoluntary

Transition to BRSR Key changes in BRSR

Reporting

Sections

Five Reporting Sections:

A) General Information

B) Financial Details

C) Other Details

D) BR Information

E) Principle wise

performance

Three Reporting Sections:

A) General Disclosures

B) Management and

processes

C) Principle wise performance

Concise and minimal

bifurcation of

important areas

Disclosure

location

Disclosure in Annual

Report

Disclosure in both Annual

Report and 1MCA21 Portal

This would ensure that

all information already

filled on MCA21 portal

will be automatically

filled while filling

BRSR

Disclosure

focus

Focus on Qualitative

Disclosure only

Qualitative and quantitative

disclosures with essential and

leadership indicators for

disclosures

Increased importance

for quantitative

disclosure for

enhanced

transparency

FormatUniversal / Single format

for all companies

Differentiated disclosure

requirements like BRSR Lite

and Comprehensive for

companies introduced for the

first time

Companies planning

to develop BRSR with

no prior experience

may consider BRSR

Lite as the starting

point to understand

the requirements

No. of

questions and

indicators

59 Total Questions

Very limited Quantitative

Indicators

140 Total Questions (~2.5x

more) – 98 Mandatory, 42

Leadership

300+ Quantitative Indicators

Better data

management and

consolidation required

for companies

BRR BRSR

KMUKS_NR110_2021 Image credit: Shutterstock

01Social and Environmental Issues in India critical from Global perspective

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India and the Global Sustainability Goals

• India accounts for 17.7% of

the world’s population

• ~50% of the population is

under 25 years of age

Demography

• India is the 5th largest

economy in the world; third

largest country by GDP

(PPP basis)

• It is among the fastest

growing major economies

of the world

• 3rd highest consumer of fossil fuels

• 5th largest auto market

• 4th largest renewables market

• Plan to base 40% of installed power

generation capacity on non-fossil fuel

resources by 2030

Policies• Incentives for Electric Vehicles

• Govt. push on “Swachh Bharat”,

Financial Inclusion & Affordable

Housing

• Govt. has committed INR 110 Trillion

(~US$1.51 Trillion) to meet UN SDG

goals

This material was prepared and information referenced to is as of end Sept 2021. Source: Indiatimes, Livemint, Economictimes, US Energy

Information Administration, Govt of India, IBEF, Bernstein research. Exchange rate at 1USD:73INR

India’s size, demographics, stage of development and policies make its sustainable

development critical to achieving global sustainable development goals

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India is critical to the cause of Global Sustainability

India and the Global Sustainability Goals

This material was prepared and information referenced to is as of end Sept 2021. Source: Indiatimes, IQAir, CNN World, World Economic

Forum, Global Gender Gap Report 2021, weforum.org › WEF_GGGR_2021

• Indian cities make up 15 of

the top 20 globally for

annual PM 2.5

concentrations

Pollution Gender Inequity

• More than 50% of the

population has no access to

safe drinking water, with

200,000 people dying each

year due to inadequate access

to safe water in India

• World Economic Forum ranks India

62nd out of 74 emerging economies

in their Inclusive Development Index

• The 2021 Global Gender Gap

Report ranked India 140 out of

156 countries

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India and the Global Sustainability Goals

India’s pledge and targets towards climate change

Source: UNCC, Climate Action Tracker, Weforum

• In the Copenhagen Accord in 2010,

India has pledged to reduce the

emissions intensity of its GDP by 20–

25% in 2020 below 2005 levels

• Emissions level of the target is

reduced compared to the estimate

before the pandemic (by 9-12%)

• India has committed to cut GHG

(Green House Gas) emissions

intensity of its GDP by 33-35%

• Increase non-fossil fuel power

capacity to 40% from 28% in 2015

• Add carbon sink of 2.5-3 billion tonne

CO2 per annum by increasing the

forest cover, all by 2030

• In 2019, Prime Minister Modi set a

goal to generate 450GWs of

renewable energy by 2030, 5x the

current capacity

• India look to transit to green

mobility and making India an

export hub of electric vehicle (NITI

Aayog, 2020)

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02Kotak Asset Management -approach towards ESG

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ESG journey at Kotak Asset Management

4th Apr

2018

Signatory to UNPRI

Responsible Investment

policy and framework:

Debt and Equity

2018

&

2019

July

2020

Established

KMAMC

stewardship

policy

Signatory to Climate

Action 100+

12th

Jan

2021

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ESG at Kotak Asset Management: Marathon and not a sprint

Kotak Mahindra Asset Management – First in India to sign up for

Kotak Mahindra Asset Management1 has signed the UNPRI : Kotak Mahindra is the first Indian

asset management group committing to make its investment decisions in a more responsible and

sustainable manner using the PRI’s voluntary framework.

ESG policy framework and Voting policy : ESG policy formulated and Voting policy modified and

implemented.

Voting on Board resolutions: Strive to vote on board resolutions of our investee companies Proxy

advice advisory is non binding. The voting committee decision is final

Voting record : Voting done for all investee companies. All voting records are maintained and available.

Designated Head of Research of KMAMC2 as an ESG coordinator with the objective of coordinating on all

ESG related activities for the asset management company. Appointed ESG coordinator for fixed income.

Stewardship policy : Stewardship policy formulated and implemented

Kotak Mahindra Asset Management has signed up for climate action 100+: as part of our

sustainability strategy to increase engagement and disclosures on climate risks and opportunities with

focus companies

1Kotak Asset Management for the purpose of this presentation refers to both Kotak Mahindra Asset Management Company Limited, India (KMAMC) and Kotak Mahindra Asset

Management (Singapore) Pte. Ltd (KMAMS). 2The research team including the head of research are part of Kotak Mahindra Asset Management Company Limited, India (KMAMC)

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ESG Investment FrameworkInvestment Strategy - Map of ESG Strategies

Source: Eurosif – The European Sustainable Investment Forum

IMP

AC

T O

N

SU

STA

INA

BIL

ITY

Pas

siv

eA

cti

ve

Ch

an

ge

Pro

mo

teA

vo

id

1 Engagement &

voting

Active investor role in companies (e.g.

voting at shareholders meetings, etc.)

2 Impact Investing

Investments aimed at

social/environmental benefit

5 Sustainability-

themed

Investments to address specific

sustainability issues (climate

change, water supply)

3 Best-in-class

Investments in companies

with higher ESG

score/performance

4 ESG

integration

Consideration of ESG factors

in the investment decision-

making process

7 Norm-based

screening

Exclusion of investments that breach

international ESG norms

6 Exclusions*

Screening of companies, sectors or

countries involved in non-ESG

activities (weapons, etc.)

ESG Strategies deployed by Kotak Considered but not actively pursued Not our investment approach currently

*For Kotak, ESG exclusion(s) are fund or mandate specific

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Investment Philosophy at Kotak Asset Management

Management

Valuation

Vision/

Growth

Orientation

Execution

Track Record

Corporate

Governance

Capital

Allocation

GARP

RoE/ ROCE/ Free Cash Flow

Business

Size

Competition

Scalability

Sustainability

Evaluation

• Business, Management & Valuation

• Governance, Environmental Impact & Social Factors*

• Using 3rd party Research to evaluate companies on ESG

• Focused Questionnaire to potential and investee companies on various E, S & G parameters

• Meeting top management twice a year and discuss ESG issues

• Voting to promote ESG in the company

Exclusion(fund or mandate specific)

• Sectoral Exclusions like Tobacco, Gambling, Coal, controversial weapons

• Companies scoring poorly on ESG factors

Engagement

*ESG factors considered include management practices, capital allocation policies, accounting norms & changes, audit & control, regulatory norms, climate & pollution

control, resource scarcity, social factors etc.

Broad Investment Framework ESG Integration into the Investment Process

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Who will make it to the portfolio?

Low High

Allocation based on

visible ESG

initiatives

No Allocation

Maximum Allocation

Allocation based on

visible improvement

in financial

performance

Financial / Growth

Impact Analysis

through Kotak’s

Business,

Management &

Valuation (BMV)

Approach

Non Financial / ESG Impact Analysis

based on ESG Scores

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Investment and stewardship process within Kotak Asset Management

RESEARCH, FUND MGMT &

VOTING COMMITTEEVoting Committee endeavors to:

1. Ensure effective oversight of its stewardship activities

2. Review monitoring and engagement activities being

carried out by the investment team on an annual basis

RESEARCH TEAM & FUND

MANAGEMENTDaily updates on companies between

research and with fund management team

COMPANIES & RESEARCH TEAM

Head of

research

Sector

specialists

Dedicated

ESG resourcesAll strategies

Companies

Research team Fund Managers

Voting Committee

The companies are monitored and assessed on regular basis.

If there is a persistent issue that may be of importance – the

company is monitored closely

The centralised research including the head of research and ESG team members are employees of Kotak Mahindra Asset Management Company Limited (India),

except for Ms Ng Hwee Keng who is an employee of Kotak Mahindra Asset Management (Singapore) Pte. Ltd

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Integrating ESG using resources at Kotak Asset Management

We engage Sustainalytics to

provide us with

• in-depth ESG coverage and

ratings of Indian companies

• controversies and other

research coverage on ESG

Sustainalytics

We engage SES to assist with

• Proxy/ voting advice along

with bespoke ESG research

on companies

Stakeholder

Empowerment Services

Kotak Asset Management is a

signatory to UN-PRI and

Climate Action 100+ and are

committed to the principles of

responsible investments &

climate change.

UNPRI & Climate Action

100+

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Wide and deep coverage of Indian investment universe

Each member is sector

specialist

Cover ~89%* of market

cap in India

Covers entire

spectrum of stocks

from large to small cap

• Twice a year mandatory senior management

interaction

• Quarterly updates on all companies

• ESG analysis / scoring of all companies

• ESG specific engagement with companies, sector

specialists, ESG conferences

• Engagement with global companies on ESG with

specific focus on Environment

This is for Kotak Mahindra Asset Management Company Limited (India). Data as on September 30, 2021.

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Kotak Asset Management - Centralized Research and ESG TeamIn-house team of analysts who also perform ESG research

Ms. Shibani S Kurian

Head – Equity Research

ESG Coordinator20 years of industry experience

Sectors: Financial Services Economy, IT

Mr. Ashish Chopra11 years of industry exp.

Sectors: Tech, Staffing,

Internet & Exchanges

Mr. Ashish Jagnani15 years of industry exp.

Sectors: Specific stocks in

small & mid caps

Mr. Bhargav Buddhadev15 years of industry exp.

Sectors: Specific stocks in

small and mid caps

Mr. Devender Singhal19 years of industry exp.

Sectors: Consumer, Fund

Management

Mr. Dhananjay Tikariha14 years of industry exp.

Sectors: Capital Goods, Pharma ex

diagnostics, Logistics, Retail Broking

Mr. Mandar Pawar16 years of industry exp.

Sectors: Oil & Gas, Retail,

Diagnostics, Telecom

Mr. Nalin Bhatt16 years of industry exp.

Sectors: Auto, Real Estate,

Aviation, Infrastructure

Mr. Arjun Khanna13 years of industry exp.

Sectors: Auto Ancillary, Media,

Midcaps, Hotel, Agricultural

Commodities

Mr. Archit Varshney2 years of industry exp.

Sectors: Consumer Staples &

Discretionary

Mr. Hrishikesh Bhagat9 years of industry exp.

Sectors: Cement and

Building Material

Mr. Arijit Dutta18 years of industry exp.

Sectors: Metals, Power,

small caps in Infra

Mr. Umang Shah15 years of industry exp.

Sectors: Financial Services

Sector Specialists with ESG angle overlay

Ms. Preeti JadhavInvestment (ESG) Analyst

with 5 years of ESG

research experience

ESG dedicated research

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Engagement & Monitoring

Monitoring changes in the ratings/ ESG

scores by our service providers

Sustainalytics and SES for the portfolio

companies

ESG review of the portfolio by the

Investment Committee on a monthly basis

Company/Industry engagement

Meeting with the top management of

companies under coverage at-least twice

in a year

Frequent interactions with industry experts,

regulators & other stakeholders

Monitoring ESG score Internal Review

Continuous monitoring of ESG risk post investment

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Our public disclosuresPolicies publicly available on our websites

Stewardship at the heart of Kotak Asset Management

Click here for KMAMC

Stewardship Policy

Exercising rights on voting on all resolutions

Click here for KMAMC

Voting Policy

Click here for Voting

Records

Walking the talk on ESG

Click here for KMAMC

Responsible Investment

Policy (Equities)

Click here for KMAMC

Responsible Investment

Policy (Fixed Income)

Note: Clickable links embedded within icons.

Click here for KMAMC

ESG webpage

Click here for ESG

investment process at

Kotak Asset Mgmt

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UNPRI scores reinforce Kotak’s commitment to ESG

Kotak was the 1st Asset

Manager to sign up for UNPRI

for domestic as well as offshore

assets in India

2020

Summary Scorecard

AUM Module Name Your Score

01. Strategy & Governance A

Direct & Active Ownership Modules

10-50% 10. Listed Equity - Incorporation A+

10-50% 11. Listed Equity - Active Ownership A

<10% 12. Fixed Income - SSA E

10-50%13. Fixed Income - Corporate

FinancialA

<10%13. Fixed Income - Corporate Non-

FinancialA

<10% 15. Fixed Income - Securitised A

Kotak

Score

Median

Score

A

A

B

B

B

B

B

Source: UNPRI. This assessment is for Kotak Mahindra Asset Management Company Limited (KMAMC) and Kotak Mahindra Asset Management (Singapore) Pte.

Ltd (KMAMS). Historic trends are not a guide to future trends.

Kotak outperformed on almost each of the modules scored by UNPRI in 2019-20

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03 Voting and Stewardship at Kotak

Image credit: University of Exeter, flaticon

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Engagements relating to votingKotak Asset Management Process

Received voting resolutions and inputs from proxy advisors

Approved votes are sent in with correct rationales

Votes are sent for approvals to the Voting Committee

No

co

nc

ern

s w

ith

re

so

luti

on

s a

nd

vo

tes

Resolutions with concerns

Views are taken on the concerned analyst and engagement

with the company over call.

The results of the call is discussed and decision is taken on

the voting.

Voting Resolutions

• Other than engagement with the

companies, we also vote on board

resolutions of our investee

companies to promote ESG

awareness

• Our voting policy has been

formulated and a voting committee

constituted. While the proxy advisor

SES advises on voting resolutions,

their advice is non-binding and

voting committee take the final

decision

Source: Internal. SES – Stakeholder Empowerment Services

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Engagements relating to votingExample of voting engagements in Jul-Sep 2021

Voting Resolutions

• Other than engagement with the

companies, we also vote on board

resolutions of our investee

companies to promote ESG

awareness

• Our voting policy has been

formulated and a voting committee

constituted. While the proxy advisor

SES advises on voting resolutions,

their advice is non-binding and

voting committee take the final

decision

Image credit: Flaticon

Company Resolution Proxy Advisor View Engagement Decision

Information

Technology

Amendments to previously

designed ESOP scheme.

Against – The company did not

provide the exercise price or

information on how the price per

share is going to be determined.

Spoke to the management. They shared their rationale

for the exercise price. It was also made public during their

AGM.

Voted – “FOR” – Will help in long

term retention of employees.

FinancialsApproval for a new ESOP

Plan

“AGAINST” - a)The exercise price or

the formula for calculating the same

has not been disclosed b)Max no. of

ESOPs to an individual employee has

also not been disclosed.

Spoke to the management. They shared their rationale

for the cap maintained for employees on basis of KRA.

They also explained their pricing formulae and vesting

period details.

Voted – “FOR” – Will help in long

term retention of employees

Textile

Manufacturing

Re-appointment of

Statutory Auditors of the

Company

Against - has not disclosed the

proposed fees to the joint statutory

auditors

Spoke to the management and they clarified with ratified

resolution where the it mentions that the higher non-audit

fees in FY21 pertains to non-financial reporting such as

sustainability and ESG. Also included the capped audit

fees for the coming year.

Voted "For" with the rationale -

Company clarified on the high non-

audit fees paid in FY 20-21. The

company released a ratified

resolution with the proposed audit

fees. Within regulatory guidelines.

Pharmaceuticals

Re-appointment of

Statutory Auditors of the

Company

AGAINST - Company had not

mentioned eligibility for appointment

and proposed fee

Consulted the IR Team – they clarified Auditor was earlier

appointed for one year and now extended for 4 years.

The proposed audit fees would be in line with last year.

Voted – “FOR” – Within regulatory

guidelines.

Steel Company

Divestment of Subsidiary

and Related party

transaction

Against - No clear information on the

reason for divestment. Issues with the

structure

Spoke to the management where they clarified - We

recognize that there are larger benefits of this transaction

i.e. debt reduction for parent company ESG and

sustainability friendly measure, simplified transaction

structure of equity and debt, that far outweigh lack of

attractive valuation presented for sale of thermal power

assets.

Voted "For" with the same as

rationale

Steel and Energy

company

Divestment of entire

shareholding of the

Company of a material

subsidiary of the Company

AGAINST - lack of disclosures and

transparency.

Consulted the company – that it is a right strategic step

which will help in deleveraging the balance sheet by

reducing debt exposure, improving ESG parameters and

reducing carbon footprint of overall consolidated

operations.

Voted – “FOR” – Simplified

transaction structure of equity and

debt, that far outweigh lack of

attractive valuation presented for

sale of thermal power assets.

Castings &

Forgings

Material related party

transactions

AGAINST - Disclosed the manner of

determining the pricing and other

commercial terms for the proposed

purchase and sale from the related

party.

Consulted the company - they have been sourcing some

raw material for a long time in the normal course of

business. Quantum of sourcing has reduced as a

percentage of overall revenue of the company over last

few years.

Voted – “FOR” – In ordinary course

of business and on arm's length

basis.

Metal producing

company

Re-appointment of

Statutory Auditors of the

Company

AGAINST - Company had not

mentioned eligibility for appointment

and proposed fee.

Spoke to the management. Clarification on the

Ratification of the remuneration of Cost Auditor for the

Financial Year ending March 31, 2022 would be same as

last year.

Voted – “FOR” – Within regulatory

guidelines.

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04 Case Studies at Kotak: Active engagement with companies

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Engagement with a Power Co: Case study #1

Net Zero Benchmark

IndicatorScore

Reasons / Steps company could

potentially improve on

Net zero GHG

emissions by 2050

ambition Company is yet to set long term targets

Long term GHG

reduction target

Medium term GHG

reduction target Targets have been set, but they are not

aligned with 1.5C scenarioShort term GHG

reduction target

Decarbonization

Strategy

Company is yet to develop

decarbonisation strategy

Capital allocation

alignment

Company is yet to align capex with

targets

Climate policy

engagement

Company has not articulated how it

engages with policy-makers

Climate Governance

Company is yet to link executive

remuneration with the achievement of

climate goals

Just Transition Not scored

TCFD DisclosureCompany is yet to conduct climate

scenario analyses

No, does not meet any criteria

Partially, meets some criteria

Yes, meets all criteria

Not currently assessed

Not applicable

Source:

Climate

Action 100+

• Company is reliant on coal for generation of over 90% of its electricity; faces increasing risks related to air

emission regulations

• International organizations like Transition Pathway Initiative (TPI) and CA100+ deem company not aligned with

Paris Agreement Goals

Key Issue

Engagement content: Climate

Engagement type:

Direct and Collaborative, member of investor

coalition under Climate Action 100+

Engagement and actions

• Specific goals and targets. Already reduced GHG emissions to 840gm/KWh (3.4% y-o-y reduction). Targets

~60GW of renewable power in another 10 years which include solar, hydro, wind by 2032; this will reduce portfolio

in fossil fuels

• First energy player using coal firing using biomass

• However, emission intensity (absolute) will increase (248mt last year and 250mt this year, but peaking within next

2-5 years. Renewable Energy will see reduction happening

• Setting up pilot projects for green hydrogen and green ammonia; use to decarbonise sectors like transport, steel

etc.

Management of GHG emissions; risk

and opportunities related to low-

carbon transition

Has the company set GHG

emission reduction targets?

Has the company published info

on Scope 1 & 2 GHG?

Source: Company reports and engagement

Public Sector Undertaking (PSU) engaged in the

generation and sale of electricity

Background

Source: Transition Pathway Initiative, Nov 2019

Information (Sep’21)

Market Capitalisation US$18.5bn

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Engagement with a Thermal Coal Co: Case study #2

Net Zero Benchmark

IndicatorScore

Reasons / Steps company could

potentially improve on

Net zero GHG

emissions by 2050

ambition

Company is yet to set long, mid or short

term targets

Long term GHG

reduction target

Medium term GHG

reduction target

Short term GHG

reduction target

Decarbonization

Strategy

Company is yet to develop

decarbonisation strategy

Capital allocation

alignment

Company is yet to align capex with

targets

Climate policy

engagement

Company has not articulated how it

engages with policy-makers

Climate Governance

Company is yet to link executive

remuneration with the achievement of

climate goals

Just Transition Not scored

TCFD DisclosureCompany has yet to implement TFD or

conduct climate scenario analyses

No, does not meet any criteria

Partially, meets some criteria

Yes, meets all criteria

Not currently assessed

Not applicable

Source:

Climate

Action 100+

• Contributes to more than 80% of India's coal production, its carbon-intensive business increasingly faces risks

associated with the demand for low carbon fuels

• No targets committed publicly

• Coal mines may turn into stranded assets – long term scenarios

Key Issue

Engagement content: Climate

Engagement type:

Collaborative, member of investor coalition

under Climate Action 100+

Engagement and actions

• Just started disclosing Scope 1 and Scope 2 emissions; sustainability report available publicly

• Carbon reduction projects through goal gasification plans, looking at moving to net zero through installation of solar

capacity system – By end June 2022 will have ~20% energy demand through solar energy and by 2024 to become

a net zero energy company

• Regularly doing energy audits as well as looking at carbon capturing systems as currently ~50% of open cast

comes from surface miners

Management of GHG emissions; risk and opportunities

related to low-carbon transition

Source: Transition Pathway Initiative, Dec 2019

Does the co recognise climate

change as relevant risk / and or

opportunity for business?

Does co have a policy

commitment to action on

climate change?

Source: Company reports and engagement. GHG – Greenhouse Gas

Public Sector Undertaking (PSU) engaged in coal mining

Background

Source: Transition Pathway Initiative, Nov 2019

Information (Sep’21)

Market Capitalisation US$15.4bn

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Engagement with a Transportation Co: Case study #3

Source: Carbon Disclosure Project

• Disclosure to CDP moving forward

• Elaboration of emission (set at 40%) and carbon neutrality targets (100% carbon neutral by 2030)

• Electric Vehicles (EVs) investments

• Securities and Exchange Board of India’s (SEBI) new sustainability report on Business Responsibility and

Sustainability Reporting (BRSR)

Key Issue discussed

Engagement content: Environment and Social

Engagement

type:Direct (1 to 1) and via group conference

Engagement and actions

• ~30.27% target achieved for FY21 against 40%

• Got rid of single use plastics

• Way forward would be EVs, Internal Combustion Engine (ICE) will go down in volume and will keep ramping up on

EV front

• Cautious on disclosing Scope 1 & 2 numbers to CDP before; already disclosed Scope 1 & 2 to CDP in 2021 and

figures available in Sustainability Report. 2030 and beyond will start to disclose Scope 3

• Internal Carbon Pricing (ICP) under discussion with CFO; paper is ready and document is available (shadow pricing

selected and have benchmarked against other companies)

• Climate Strategy - Trying to do assessment on climate strategy (RCP8.5 – planning a 2°C scenario). Looking at

how to mitigate physical and transition risk. Having assessments on SBTi and TCFD; will fix agency going forward

and target to have it ready by FY23

Disclosure to Carbon Disclosure Project (CDP)

Category Disclosure

2020 Permission Status Private

Final score 2020 D

Scope 1 Private

Scope 2 Private

Scope 3 Private

Internal Carbon Pricing Private

Only Motorcycle/scooter manufacturer included in

Dow Jones Sustainability Index

Source: Company reports and engagement

• Two-wheeler (2W) manufacturer. Co manufactures and

sells motorized 2Ws up to 350 cubic centimetres engine

capacity, spare parts and related services

• Management aware on Sustainability and have strong

frameworks related to ESG

Background Information (Sep’21)

Market Capitalisation US$15.4bn

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Largest non-bank private-sector

life insurer in India

Background

Engagement with a Life Insurance Co: Case study #4

ESG engagement and rating

• Was classified by a large service provider as conglomerate and

assigned a higher than industry average risk rating score

• Inadequate public disclosure and knowledge in terms of ESG and

sustainability

Key Issue

• Engaged, educated and provided the company with best practices carried out by peers

• Connected them with the ESG rating agency to get their industry/sector classification sorted out

Subsequently, the company broadened their public disclosures and efforts on ESG, such as Energy Reduction, Waste Management, Water

Management etc.

As a result, the company was reclassified by the ESG rating agency under Life & Health Insurance category in Jun’21 and rerated with a much

lower ESG risk rating (lower the rating, the better the company) considering the reclassification and their ESG disclosures

Engagement and Action

Engagement content: Environment, Social & Governance

Engagement type: Direct (1 to 1)

Information (Sep’21)

Market

CapitalisationUS$4.7bn

Source: Company engagement

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Important Notice

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Investments in India are subject to a number of risks including, but not limited to, risk of losing some or all of the capital invested, high market volatility, variable market

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and restrictions on investment activities of foreign investors. Past investment performance should not be viewed as a guide to, or indicator of, future performance and the

value of investments and the income derived from them can go down as well as up. Investments in India should be considered only as part of a diversified overall portfolio of

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This document has been prepared by Kotak Mahindra Asset Management (Singapore) Pte. Ltd. (“KMAMS”) whose registered office is at 16 Raffles Quay #35-04A, Hong

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