Morgan Stanley

### 3. Governance, Implementation and Reporting

Morgan Stanley has a governance system in place to review and implement this Policy Statement.

**Governance**

This Policy Statement is reviewed annually by ESRM, senior representatives of the business units, the GSO, and other relevant internal control functions and may be updated as necessary to reflect developments in our sustainability strategy or business operations. This Policy Statement is approved by the Firm's ESG and Global Franchise Committees and material amendments are presented to the Governance and Sustainability Committee of the Morgan Stanley Board of Directors for approval.

###### Board and Executive Oversight

Climate change management is a priority for senior leadership at Morgan Stanley. We take a globally harmonized approach to managing climate-related risks, opportunities and activities with oversight from firm leadership and input from our businesses.

The Nominating and Governance Committee of our Board of Directors reviews corporate governance principles and environmental, social and governance (ESG) initiatives. The Board's Risk Committee oversees climate-related risks and is regularly briefed by the firm's Chief Risk Officer (CRO) and other senior leaders on developments and progress. In 2021, the CRO reviewed our 2030 interim financed emissions targets and their corresponding sectors within our corporate lending portfolio with the Board. Moving forward, firm leadership will oversee the shift in relevant business activities toward net-zero.

###### Risk Management Oversight

Our CRO leads the Firm Risk Management (FRM) Division and has ultimate responsibility for managing climate-related risks across our businesses and operations, reporting to the Board's Risk Committee. Along with Morgan Stanley's CEO, the CRO chairs the Firm Risk Committee (FRC), the highest-level firmwide risk governance body. Our CRO, alongside the Vice Chairman and Head of External Affairs, also co-chairs the Climate Risk Committee—the most-senior governance body solely focused on climate risk. The Climate Risk Committee reports to the Firm Risk Committee (see Firmwide Executive Committees). In 2020, the CRO appointed Global Co-heads of Climate Risk to help coordinate climate integration across FRM.

Our Environmental and Social Risk Management (ESRM) Group identifies and assesses broader environmental and social risks that could impact the firm's reputation, as set forth in [our Environmental and Social Policy Statement. Approved by](https://www.morganstanley.com/content/dam/msdotcom/en/about-us-governance/pdf/Environmental_and_Social_Policy_Statement.pdf) the Global Franchise Committee and the Board Nominating and Governance Committee, the policy statement provides guidance on enhanced due diligence criteria for specific sectors, including carbon-intensive sectors, as well as when to escalate transactions to senior management and the Regional or Global Franchise Committees for further review. For more information [on ESRM oversight, see our Sustainability Report, page 53.](https://www.morganstanley.com/content/dam/msdotcom/en/assets/pdfs/Morgan_Stanley_2021_Sustainability_Report.pdf) [...] **Regional and Global Franchise** **Committees oversee franchise risks** to the firm, including reputational risks associated with climate change. Members of the Committees are senior representatives from Firm Management, Business Units and Infrastructure (such as Legal, Compliance, Financial Crimes, Regulatory Relations, Corporate Communications, Risk Management, Human Resources) and personnel from the relevant regions. Business transactions and clients that meet designated environmental and social risk criteria may require escalation to the Regional and Global Franchise Committees. Items presented to the Franchise Committee for review must be endorsed in advance by the relevant senior divisional and regional management.

The Trustee maintains oversight of climate related risks and opportunities by: [...] Putting in place effective climate governance arrangements through establishing a TCFD Working Party who are responsible for supporting the Trustee in the creation of the TCFD report; [...] Ensuring that the Plan's investment, actuarial and covenant advisers have clearly defined responsibilities in respect of climate change and that they have adequate expertise and resources, including time and staff, to carry these out; [...] Ensuring that the Plan's advisers are taking adequate steps to identify and assess any climate-related risks and opportunities which are relevant to the matters on which they are advising, and that they are adequately prioritising climate-related risk; [...] Considering and documenting the extent to which the advisers' responsibilities are included in any agreements, such as investment consultants' strategic objectives and service agreements; and [...] Ensuring that the Plan's investment managers are managing climate-related risks and opportunities in relation to the Plan's investments (with input from the Investment Committee – see below), and have appropriate processes, expertise and resources to do this effectively. [...] The Investment Committee is responsible for: – The Plan, receiving and reviewing periodic written reports prepared by the Plan's investment consultant covering the investment managers' investment performance, and their integration of environmental, social and corporate governance risks and opportunities (including climate risk) into their investment processes; – Meeting with the appointed and prospective investment managers to review investment performance, asset allocation and their engagement with investee companies (including in relation to climate risk); and – Reporting back to the Trustee on key issues raised at the Investment Committee, and the exercise of any delegated powers. [...] The TCFD Working Party is made up of a sub-group of the Trustee with representatives of the Company who are involved in the sponsoring employer's TCFD reporting. The TCFD Working Party is initially responsible for understanding the requirements of the TCFD on the Plan, and for supporting work towards ensuring the Plan complies with those requirements, and to undertake any other actions as delegated to the Working Party by the Trustee or its sub-committees. The Working Party's remit includes: – Arranging training as the Working Party believes is necessary to improve Trustee knowledge and understanding on climate risk; – Taking advice from the Trustee's advisers on and making recommendations to the Trustee on appropriate climate metrics to monitor; – Taking advice from the Trustee's advisers on and making recommendations to the Trustee on appropriate climate-related targets; – Providing input into (and agreeing the scope of) investment and funding (including covenant) climate-related scenario analysis to be provided by advisers; and – Understanding the position of Morgan Stanley, the sponsoring employer, with respect to TCFD reporting and, where relevant, integrating key findings and learnings into the Plan's reporting.

Morgan Stanley's Corporate Political Activities Policy Statement is approved by the board's Nominating and Governance Committee, and sets out our policies on U.S. political contributions, lobbying activities and trade association participation. In accordance with the policy, we prohibit corporate contributions at the U.S. federal, state or local levels.

Morgan Stanley Bank Asia Limited is a subsidiary of Morgan Stanley which is a financial holding company organized and existing under the laws of the State of Delaware in the U.S. [...] In line with the risk management principles of MSBAL, the responsibilities of managing climate-related risks are allocated among three lines of defense (Business Units and Support Functions (first line), Independent Risk Management and Compliance Functions (second line) and the Internal Audit Department (third line)), which is designed to separate risk owners from independent risk control functions. [...] ESGC is also one of the first escalation points for any irregularities or material climate risk issues.

The MSIM ESG Committee will continue to provide oversight of MSIM ESG-related goals, strategy and regulatory risk, such as "greenwashing". [...] MSIM's Global Stewardship function, as part of the MSIM Sustainability team, supports and helps investment teams coordinate MSIM proxy voting and investee engagement activities. [...] MSIM's Sustainability Team is split into four verticals: **1.** _Head of Sustainability Regulation and Policy – leads_ projects to support MSIM's work in this area, including implementing key regulatory and industry ESG frameworks, representing MSIM in ESG-focused industry forums, and developing MSIM's approach to key sustainability themes. **2. Head of Sustainability Strategy and Solutions – focuses** on strategic implementation, regulatory and product-related sustainability initiatives, including new products and existing strategies, supporting investment teams on product positioning, ESG labels, developing frameworks and content generation. **3. Head of Global Stewardship – leads MSIM's** Stewardship team (further details provided later in this section), oversees MSIM's proxy voting and stewardship-related activities, supporting investment teams. Responsibilities also include corporate governance research and analysis, and monitoring and developing MSIM stewardship strategies. **4. Head of Sustainability Data and Technology – leads** sustainability data due diligence and selection, quantitative analysis of portfolios and technology innovation to address use case in research, portfolio construction, and regulatory and client reporting. The Head of Sustainability Data and Technology also chairs the Sustainability Tech and Data Oversight Council. [...] MSIM ESG Committee: Key topics overseen by this Committee include: ESG-related goals, ESG-related product development and marketing frameworks, MSIM's investment teams' ESG-related engagement programme, ESG-related training, and ESG-related technology and data initiatives. The Committee is co-chaired by the MSIM Co-Head and Chief Investment Officer of the Solutions and Multi-Asset Group and MSIM's Global Head of Risk and Analysis. Key members include MSIM's Head of Sustainability and MSIM's Chief Operating Officer, as well as senior members of Risk, Legal and Compliance divisions. The Committee consists of senior representatives from MSIM's Sustainability team, Office of the Chief Operating Officer, and other advisory and related functions who oversee and guide MSIM's support for the sustainable investment strategies of each investment business. [...] Proxy Review Committee: Oversees implementation and coordination of MSIM's proxy voting policy. The Committee consists of investment professionals who represent the different investment disciplines and geographic locations of MSIM, and is chaired by the Head of the Global Stewardship Team.

The Morgan Stanley Corporate Political Activities Policy Statement ("Policy"), which is approved by the Governance and Sustainability Committee of the Morgan Stanley Board of Directors (the "Board"), sets forth basic principles concerning Morgan Stanley's U.S. political contributions, political action committee, lobbying activities and trade association participation. [...] The Government Relations Department, under the oversight of Morgan Stanley's Chief Legal Officer and Chief Administrative Officer, who is a member of Morgan Stanley's Operating Committee and reports to the Chief Executive Officer, and in coordination with the Legal and Compliance Division and senior management, as appropriate, manages the identification of Morgan Stanley's legislative and regulatory priorities and its participation in the public policy arena, including (i) Morgan Stanley's dialogue with U.S. federal and state government officials and government officials in the many jurisdictions in which Morgan Stanley operates and (ii) expenditures related to such participation. [...] Morgan Stanley's principal U.S. trade association memberships as well as the expenditures relating to such memberships are reviewed annually with the Government Relations Department and the Governance and Sustainability Committee of the Board. [...] As set forth in its charter available at www.morganstanley.com/about-us-governance/ndchart, the Governance and Sustainability Committee of the Board, which is comprised solely of independent members of the Board oversees, and receives reports at least annually on Morgan Stanley's political activities including: (i) Morgan Stanley's compliance with this Policy prohibiting U.S. corporate political contributions, (ii) political contribution activities of the MSPAC, (iii) Morgan Stanley's significant lobbying priorities, and expenditures attributable to lobbying in the U.S. and (iv) Morgan Stanley's membership in, and expenditures relating to, its principal U.S. trade associations.

• Transparency in Lobbying - John Chevedden

– The proposal requests an annual report on Firm policy and procedures governing direct and indirect lobbying or grassroots lobbying communications, payments made by Morgan Stanley used for lobbying, membership in and payments to tax-exempt organizations that write and endorse model legislation, and a description of management and Board oversight over making these payments.

– Our Corporate Political Activities Policy Statement (Policy Statement), available on our website, provides transparency with respect to the principles and procedures concerning political activities and already addresses the material items requested by the proposal.

– We recently enhanced our disclosures regarding our lobbying activities and consolidated our public disclosures regarding our political activities within the Policy Statement, including (i) policies related to grassroots lobbying and organizations that write and endorse model legislation, (ii) average lobbying expenditures for the past three years, and (iii) aggregate dues attributable to lobbying by U.S. trade associations.

The Climate Risk Committee (CRC) is the senior body responsible for integration of climate-related risk considerations across the firm and is co-chaired by the Chief Risk Officer and the Chief Sustainability Officer. In 2020, the CRO appointed Global Co-heads of Climate Risk and a Head of EMEA Climate Risk to help coordinate climate integration under the CRO into Firm Risk Management (FRM). In 2020, our CRO approved a risk management process to identify, assess and manage climate-related risks; and approved the quantitative integration of climate risks into the firm's risk management assessments. [...] Externally, Morgan Stanley participates actively in industry groups shaping climate policy, such as the Business Roundtable and the US Chamber of Commerce's Task Force on Climate Actions. Morgan Stanley is also a member of the Business Roundtable and was a contributor to the working group that helped develop their climate policy position paper. GSF and Government Relations partner to represent the firm in various trade associations to the extent they have climate and sustainability-focused working groups to help represent the firm's views. For example, GSF has been coordinating with the Regulatory Relations and Firm Risk Management teams in the U.K. to engage and respond to the Prudential Regulatory Authority draft supervisory statement addressing banks' approach to managing the financial risks from climate change. GSF partnered with the Risk Management Division in London to develop both short- and long-term scenarios in the United Kingdom to help test resilience to potential material financial risks. Further, The Prudential Regulatory Authority (PRA) Climate Risk Working Group oversees Morgan Stanley's response to the Prudential Regulatory Authority's April 2019 supervisory statement on climate risk management at banks and insurance companies in the United Kingdom. Members from our UK Risk Management, Regulatory Relations and Government Affairs teams along with GSF representatives, identified potentially relevant climate risks for our UK entity and developed appropriate climate scenarios. The Working Group coordinates with U.S. Risk Management leadership to align approaches.