Code of Conduct and Corporate Governance

Schroders Values and Objectives with Respect to Conduct

Schroders approach to Conduct is built on its business culture and values. These include:

• Demonstrating and nurturing a culture in which all our people are expected, encouraged and supported to ‘do the right thing’ in all our businesses, in all our geographies and at all levels.
• Taking a long-term approach to creating value and good outcomes for our clients, fund investors and shareholders.
• Applying our core values of Excellence, Integrity, Innovation, Passion and Teamwork in the design and delivery of our products and services to clients and fund investors.
• Investing in strong controls, governance, training and risk management processes to support the creation and protection of long-term value.

These translate more specifically at a business level to the following key objectives:

• Culture: Embedding appropriate recognition and management of Conduct risks in our business and people management – in strategy, business plans, prioritisation, information systems, talent management and the employee lifecycle.

• Investment: taking an approach in our investment strategies and decision-making that respects our clients’ investment horizons; understanding and addressing clients’ needs and expectations; striving for excellent risk adjusted performance; applying best practice risk management standards; maintaining active stewardship of our investments recognising our responsibilities as a substantial investor on behalf of our clients; and upholding high market standards of integrity and conduct.

• Institutional: designing and delivering solutions that meet the needs of clients and, where appropriate, their underlying investors; building and sustaining high quality client relationships; and open and proactive communication with clients.

• Intermediary: designing and delivering funds that meet the needs of identified target markets and fund investors; providing clear communications that enable intermediaries to explain and advise upon, and investors appropriately to understand, our funds; and obtaining and appropriately addressing intermediary and investor feedback which enables us to assist intermediaries and fund investors to achieve good investor outcomes and manage investor risks.

• Wealth: looking after our clients and managing their assets to high standards, delivering advice, investment performance and banking services that meet their aims and which are appropriate within the parameters of their risk appetite; delivering excellence in the client experience and thus high levels of client satisfaction; and conducting our business in an ethical and compliant manner.

• Infrastructure: maintaining and continuously enhancing strong first line and second line processes and controls designed appropriately to mitigate the key risks to clients and fund investors in our management of their assets; and giving priority to clients and fund investors in the rectification of errors for which we are responsible in relation to their business.

Compliance, Risk Management and Internal Audit

Conduct and regulatory risks are present in many staff activities throughout the organisation (including front, middle, back office and supporting functions).

As defined in our three lines of defence model, in addition to the risks listed in this framework and the Compliance Risk and Control Self-Assessment (RCA), business areas act as the first line of defense and are responsible for identifying and managing regulatory and conduct risks applicable to their activity. Compliance along with other control functions (for example Risk) act as the second line of defense providing guidance, monitoring and oversight of business activity. The third line of defense is Internal Audit, who provide independent assurance over the operation of controls in the first and second line.

Although conduct and regulatory risk are separate risk categories, where these materialize it can often result in reputation and financial risk which can be substantial depending on the circumstances of the breach.

Compliance oversight takes different forms with varying frequency depending on the local requirements and the assessment (impact and likelihood) of identified compliance risks. Compliance seeks to provide reasonable assurance to senior management and Boards and Audit and Risk Committees on the effectiveness of the controls and business’ compliance with regulatory requirements.

The internal audit programmed conducts a retrospective and independent review of the operation of controls to continuously improve our control environment which is supported and validated by the internal auditors.

The work and performance of the Compliance function is reviewed on a periodic basis by Internal Audit. Our organizational structure preserves the segregated functions of Compliance and Internal Audit to ensure the validity and effectiveness of the review(s). The team also carries out thematic compliance testing work.

Goverance for Board of Director and Board of Commissioner

The Board believes that it operates most effectively as a unitary Board, with an appropriate balance of Board of Directors, Independent Commissioner and Board of Commissioner who have a connection with the Company’s principal shareholder. No individual should be able to dominate the Board’s decision making.

The Chairman of Board of Commissioner is responsible for the leadership of the Board and for ensuring its effectiveness in all aspects of its role through regular monitoring and evaluation of Board of Directors.

The Chief Executive of Board of Directors is responsible for the executive management of the Company, including the creation of shareholder value over the long-term through growth in profits and the recommendation of the Company’s strategy and budget.

The Independent Commissioner acts as a sounding board for the Chairman of Board of Commissioner, is responsible for the evaluation of the Chairman’s performance and serves as an intermediary for the other Directors as necessary. The Independent Commissioner is available to shareholders if they have concerns which cannot be resolved through discussion with the Chairman of Board of Commissioner or the Board of Directors.

Directors must ensure that their other commitments do not conflict or materially interfere with their responsibilities to the Company. Directors are required to notify the Company Secretary in advance of any actual or potential conflicts through other directorships or shareholdings. They must disclose to the Board any potential conflicts of interest they may have in relation to any matter under discussion by the Board and, if appropriate, refrain from participating in discussions and voting on a matter in which they have a conflict.

Member of Board of Commissioners and Directors are expected to attend all Board meetings and meetings of its Committees on which they serve and to spend the time needed in preparation for such meetings. In addition, Directors should stay abreast of the Company's business and markets. The agenda for each Board meeting is established by the Chairman of Board of Commissioners and the Chief Executive of Board of Directors with the Company Secretary.

The Company Secretary is responsible for ensuring there are appropriate information flows between the Board and its Committees and senior management. The Company Secretary, along with the Chairman, will regularly review the Board and Company’s governance arrangements with a view to ensuring they remain fit for purpose, and recommend or develop initiatives to strengthen the governance of the Company.

The Board and each Board Committee may hire legal, accounting, financial or other advisers as necessary in their best judgment to obtain advice with respect to the discharge of their responsibilities without the need to obtain the prior approval of any officer of the Company, although such advice would usually be coordinated by the Company Secretary.