1. Trade Union Share Owners Janet Williamson TUC Senior Policy Officer and Trustee of the TUC Pension Fund

2. Context - increased union interest in shareholder activity Financial crisis - highlighted importance of shareholders’ engagement role and risks if not carried out properly Public policy developments – Stewardship Code UNISON capital stewardship programme since 2007 Union campaigns on private equity Union shareholder resolutions: – Unite shareholder resolution at Tesco AGM in 2009 – UNISON and PCS support for Tar Sands resolution at BP and Shell AGMs in 2010

3. TUC/union group on workers’ capital From 2008, TUC led a group of union officers and discussing ‘workers’ capital’ issues Group strongly supported idea of collaboration between union pension funds on voting and engagement TUC keen to lead in this direction – natural coordination role for TUC Reflects the principle of ‘collectivism’ that is at the heart of trade unionism

4. Collaboration on voting and engagement Unions’ own funds should come together to: Vote in line with trade union values at AGMs Engage with companies in line with union values Benefits: Speak with one voice in capital markets More effective and cost-efficient than unions acting individually

5. Voting according to trade union values Trade unions engaged in public policy debates Detailed policy on employment relationships Also take a strong stand on executive pay – quantum and relationship between directors and other workers – sceptical about over reliance on performance- related pay Challenge: gap between union values and fund manager voting

6. Fund manager voting on union-backed resolutions – First Group (2006) Filed by a group of investors including trade union funds about anti-union activity in its US operations Supported: Co-op, Hendersons and PIRC Abstained: Aviva, Blackrock, F&C, HSBC Opposed: Fidelity, Hermes, Insight, JP Morgan, L&G, M&G, Newton, Risk Metrics, Shroder, Standard Life, State Street

7. Fund manager voting on union-backed resolutions – Tesco (2009) Organised by Unite and concerned the treatment of agency workers in the company’s meat supply chain Supported: CCLA, PIRC Abstained: Baillie Gifford, Co-op, F&C Opposed: Aberdeen, Aviva, Axa, Barings, Blackrock, Fidelity, Hermes, JP Morgan, Lazard, L&G, M&G, Newton, Risk Metrics, Royal London, Scottish Widows, Standard Life, State Street, UBS

8. Fund manager voting on union-backed resolutions – BP and Shell (2010) Organised by ShareAction (Fair Pensions as was) and sought to address development of tar sands in Canada – co-filers included UNISON and PCS Supported: Co-op, CCLA (BP only) Abstained: Aviva, CCLA (Shell only), F&C (BP only), PIRC Opposed: Aberdeen, Aviva, Aegon, Baillie Gifford, Blackrock, F&C (Shell only), Fidelity, Hermes, JP Morgan, L&G, M&G, Martin Currie, Newton, Royal London, Scottish Widows (Shell only), Standard Life, Threadneedle, UBS

9. Trade Union Voting and Engagement Guidelines No one fund manager or adviser supported all three of these union-backed resolutions Conclusion – to vote in line with trade union values required development of bespoke guidelines Trade Union Voting and Engagement Guidelines – available on the TUC website Based on TUC and trade union policies

10. Trade Union Share Owners Launched end of March 2013 Initial participation of staff pension funds of TUC, Unite and UNISON Over £1 billion assets All unions funds welcome to join at any time – pension funds and general funds Other funds also welcome if happy to follow our voting guidelines

11. Voting template and implementation Appointed PIRC – worked with us to create voting template from our guidelines Generate voting recommendations for FTSE 350 PIRC can executive the votes Or TUSO members can mandate fund managers to follow voting recommendations

12. Voting policy - examples Ratio between top and average company pay is over 20:1 – vote against remuneration reports Pay increases for executives do not reflect pay increases for other staff – vote against remuneration report Vote against long-term incentive schemes that do not include all staff on the same terms Equal opportunities in terms of board recruitment – vote against Chair of nomination Committee

13. Engagement National Express – anti-union activity in US subsidiary Durham School Services TUSO signed investor letter Attended AGM on behalf of TUSO Develop further engagement activities after voting bedded in

14. Governance principles Each participating fund gets an equal voice and vote So far, all decisions made by consensus Individual funds can opt out of any voting recommendation they want – retain final say on how their fund casts their votes TUSO does not take positions on stock selection or divestment issues

15. Next steps Grow - reaching out to more union funds Develop engagement strategy – possible focus on advertising all directors’ positions publicly Interested in collaborative engagements with other investors where we share concerns