To our stakeholders:

I am pleased to confirm that Baillie Gifford reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption. In this annual Communication on Progress, we describe our actions to improve the integration of the principles of the Global Compact into our operations.

In addition to giving consideration to the principles of the UN Global Compact, we are also considering how we can best support the UN Sustainable Development Goals, and have begun to use the SDG framework as a measurement tool for our impact investment work. In addition to the information provided below, further material on our work to be a responsible company and is available on our website. This includes our ‘Shared Beliefs’ statement which sets out the principles to which we aim to operate as an investment firm.

Andrew Cave
Head of Governance & Sustainability, Baillie Gifford

As a privately owned investment management partnership based in the United Kingdom we have limited direct exposure to human rights risks, but do have indirect exposure and influence through our supply chain and investment portfolio.

As a privately owned investment management partnership based in Edinburgh, Scotland we aim to uphold the highest standards of adherence to human rights in our workplace and supply chain.

- To support this, we have a range of policies in place across our organisation which set out clear expectations for the way we operate our business. These policies cover off our expectations and procedures for protecting the rights of all stakeholder groups – clients, employees, contractors and other suppliers. Policy documents are available to all employees and on our website.

- With respect to client and customer rights, we aim to uphold the highest possible standards of customer service. We are regulated by the UK Financial Conduct Authority, and undertake regular assurance work on our performance in this area to ensure that we are respecting and protecting customer rights.

- Staff receive equal opportunities training, and we have an Equal Opportunities Policy which is available to all employees.

- Any issues or complaints are treated with seriousness and professionalism by managers and the HR department. We also have a clearly defined grievance escalation process and whistle blower guidance.

- Additional Information on how we aim to respect and protect human rights in our supply chain is provided in the labour rights section below.

We evaluate performance in this area through regular risk assessments.

Baillie Gifford aims to be an employer of choice, and aims to provide the best possible working environment for employees, on-site contractors and suppliers.

We take all reasonable steps to ensure that any Baillie Gifford employee or individuals working within our business or in our supply chain are not being exploited, and that all relevant employment, health and safety and human rights laws, and international standards are being rigorously adhered to across our business operations, including any relevant minimum wage standards.

As a regulated investment management firm with a supply chain that mostly consists of services and technology, we believe that there is overall a low risk of forced labour in our supply chain. Nevertheless, we are committed to taking all reasonable steps in order to ensure that there is no modern slavery or human trafficking in our supply chains and expect that all of our suppliers adhere to similar high standards as set out in our Baillie Gifford Supplier Code of Conduct.

A group of Baillie Gifford’s size has suppliers of various size and nature, including suppliers of IT and other office equipment and professional services from our lawyers, accountants and other advisers and consultants. However we have minimal contact with the countries and sectors that are generally regarded as being the most likely to have a risk of modern slavery.

Suppliers will be assigned a modern slavery risk rating and due diligence will be completed based on this rating as part of an ongoing risk assessment. The risk rating of suppliers will be kept under review throughout the course of the engagement for those identified as medium or high risk suppliers.

To ensure a high level of understanding of the risks of modern slavery and human trafficking in our supply chains, we have provided training to key staff involved in vendor management. We have also provided awareness to all staff through annual anti-financial crime e-learning.

There is a diversity inclusion working group in place to look at and improve working practises within Baillie Gifford in order to improve all aspects of diversity. The group acts as an advisory body to the rest of the firm, supporting initiatives that we believe will further improve diversity and inclusion within Baillie Gifford and our broader community. As an example of initiatives in this area, Unconscious Bias workshops are currently being undertaken across the investment floor as part of ongoing efforts to improve inclusion, and help us to mitigate the influence of bias on our judgement and decision making.

As far as we can ascertain, we believe that we have fully implemented our key policies in this area over the last year. One specific area of development to note in the last twelve months has been with respect to gender pay gap disclosure, detailed below:

Gender Pay Gap Reporting

The UK Government has introduced a requirement for UK companies (with more than 250 employees) to publish certain statistics which measure their gender pay gap. This gap refers to the difference between the average earnings of men and women, expressed as a portion of men’s earnings. As of April 2017, Baillie Gifford’s median gender pay gap – the difference in hourly pay between the middle-earning male and female members of staff – is 18%. The difference in median bonus pay is 25%. Expressed as a mean, our gender pay gap is 23% and 56% for hourly pay and bonus pay respectively. These figures highlight that we currently have more males than females in senior roles and reflect a higher level of pay and bonus for greater seniority.

This is different to equal pay for those in the same role. Our annual remuneration process considers pay for those in comparable roles. We aim to pay individuals equally for equivalent jobs across the firm. In a people business treating colleagues fairly and well is vital. Pay is only one measure of fairness, but it is the most tangible one. We put a lot of time and effort into being as fair as possible.

The under-representation of women in senior positions is an issue that we take seriously. This has been improving, reflecting the efforts that we have already put in place to appeal to a wider range of employees. Five years ago women represented only 13% of our most senior positions, and our median hourly pay gap was 29%. Today, both figures are 18%. Looking ahead, we have a strong and balanced pipeline of talent. In our investment teams, the proportion of female graduate recruits has steadily been rising over the last fifteen years, and now half of our investors in the 0–10 year cohort are female. We have achieved an even gender balance in our operations graduate programme, which has been in place since 2008. In our Clients Department we introduced a trainee programme in 2011 and now 51% of our Client Managers are female. We are optimistic that this recruitment will result in a continued improvement in the percentage of women in senior roles over the next decade.

Ensuring progress also requires the right conditions to attract, retain and develop our excellent people, and to challenge any potential barriers to these conditions being achieved. Our Diversity and Inclusion Group are working to establish how the firm can continue to improve in this respect. Each Baillie Gifford partner and employee has their part to play. We aspire to always be objective and fair and for all employees to feel valued. Above all, we must continuously adapt, improve and invest to ensure that Baillie Gifford remains an engaging and progressive place to work. Over time we expect our gender pay gap will continue to narrow. Our annual report on our gender pay gap is available on our website.

The Baillie Gifford Green Group works with internal and external stakeholders to be mindful of our environmental impact and effect positive change by focusing on the following areas:

- Energy consumption
- Recycling
- Green commuting
- Environmentally-conscious practices
- Supplier engagement

The group is made up of representatives from across the firm who are actively interested in the impact of our environmental footprint. With this in mind, the group regularly engages with our suppliers to ensure our waste is suitably recycled; promote greener commuting through the Cycle to Work scheme and bike maintenance workshops, and encourage our colleagues to improve their green credentials by increasing their awareness of how even small changes can make a difference to our environment.

Features of Baillie Gifford’s Environmental Policy

- We aim to minimise waste and promote recycling
- We implement measures that reduce energy usage
- We dispose of office furniture and equipment in a responsible fashion via charitable donations and recycle where possible
- We audit the environmental impact of our operations
- We have been awarded Chain of Custody Certification by an independent body, in accordance with the rules of the Forest Stewardship Council (FSC)

How we implement our Policy:

- We commissioned an independent company to carry out an emission assessment of our building
- We operate a cycle to work scheme to encourage environmentally friendly commuting and supplement this with the provision of secure storage and shower facilities
- We have roof gardens which control the release of water into the drainage system
- We give preference to suppliers of equipment and materials who implement environmentally sound policies
- All lighting, heating and cooling systems are computer controlled
- Where possible, meetings are conducted using our in-house conference call facilities and video conference units which reduce the need to travel
- We sponsor local green organisations and encourage our staff to volunteer their services

We regularly review data on our environmental performance through our internal working group. In addition to the work that we do to manage our own environmental impact, we also undertake extensive work to understand and manage environmental risks and impacts in our investment portfolio. Further details are available on our website - https://www.bailliegifford.com/

Baillie Gifford is committed to the implementation of measures designed to prevent the possibility or occurrence of bribery and corruption in all of its forms. As a regulated investment management firm we aim to operate our business to the very highest ethical standards.

The firm conducts regular training on relevant fraud related matters and operates policies and procedures which are communicated to all staff as part of their induction programme and which are accessible to all staff on-line.

Staff are expected to adhere to ethics policies which cover standards of behaviour in their conduct with other members of staff and with clients and suppliers. In addition, personal account dealing rules apply to all staff dealing. These rules require pre-clearance of personal trades and impose conditions on dealing, designed to ensure that the interests of our clients are not comprised in any way.

As part of our initiative to identify and mitigate risk we have adopted a risk-based anti-bribery and corruption risk assessment methodology to rate each of our direct suppliers in order to determine what level of due diligence is required. This approach is designed to be proportionate to the risks identified and will be supported by the existing anti-bribery and corruption work which is undertaken by our Compliance function. Each supplier is considered on a case-by case basis, based on a combination of both its geographic region and the sector within which it operates.