State Street Global Advisors Limited

The following disclosure describes how the directors have had regard to the matters set out in section 172(1) (a) to (f) and forms the directors’ statement required under section 414CZA of The Companies Act 2006

Clients

The Company’s principal activities are the provision of financial and investment advice, and fund management to its clients. The Company needs to engage with clients to ensure continued provision of relevant services & products, supporting the long-term success of the organisation.

The Company holds various client events and conferences covering a range of topics and through the normal course of business the Company has regular client engagement, having meetings with clients as appropriate.

During the period one of the key areas of focus have been the ability of the Company to support clients post Brexit, and whilst some client contracts novated to SSGA Ireland Ltd others remained with the company given the change in Brexit timings. See “How stakeholder interests have influenced decision making”, decision 2.

The Company engages with clients with regards to existing and new capabilities and discussions have included ESG investing, liability driven investment & OCIO resulting in the further development of our ESG capabilities, the launch of ESG funds and strategies and jurisdictional expansion to enable the company to contract for UK OCIO services.

Shareholder

As a wholly-owned subsidiary to is important to maintain alignment with the parent’s strategy whilst maintaining appropriate governance at the Company level.
The Company has engaged with the shareholder through Group committees and regular communication and reporting, including reporting to the parent of the Company’s capital position and material items.
Engagement involved plans for the distribution of surplus cash and capital resulting in the payment of a dividend distribution, see “How stakeholder interests have influenced decision making”.

Workforce

The Company is reliant on its workforce for the provision of services to clients and the continued engagement of the workforce is essential to meet changing client demands, regulatory requirements and effective risk management.

Senior management and executive directors hold regular townhalls, additionally staff are invited to skip level meetings with senior management allowing a two way dialogue. The Company also participates in the global State Street employee engagement survey and in the year a full employee engagement survey was completed covering areas including engagement, alignment and cultural traits. The results of the survey were received towards the end of 2019 and management have met to review and actions are to be proposed and presented to the Board.

The Board is to consider wider culture and conduct responsibilities, and working with senior management to determine how these are fulfilled.

Regulator

The Board recognises the importance of open and continuous dialogue with its regulator, the Financial Conduct Authority. The regulator undertakes routine Supervisory Review and Evaluation Process (SREP) visits as well as having regular updates with management. Management engages with the regulator on material issues as they arise.
In the period, interactions with the regulator have been focussed on the SREP review and firm evaluation letter, Brexit plans and dividend notification, see “How stakeholder interests have influenced decision making”.

The Board agreed a number of actions to address the points raised by the regulator in the firm evaluation letter, and receives regular progress updates from management.

Group companies

As part of a wider group, the Company is both reliant on the group for provision of certain services and is a provider of services to other group companies. The Company has in place a Board-approved outsourced arrangement oversight framework and the Board receives updates from relevant group functions at board meetings, and results from performance reviews.
Areas covered by the Board in the period have been cybersecurity, adoption of outsourcing policies and revision of service level agreements. There has been increased scrutiny of cybersecurity, resulting in more focussed updates from Group IT on issues, as they relate to the Company, and their resolution.

Suppliers

The Board recognises that the Company has only a limited number of non-group suppliers. However, engagement is important with key suppliers to ensure continuity of service and to maintain awareness of developments and changes on both sides of the relationship. Management undertakes routine meetings with key external advisors and suppliers, and the Company complies with payment practices and performance reporting.

Community and Environment

The State Street Group is committed to managing the wider social, environmental and economic impacts of its operations. The Board recognises its own obligations, and received training on Modern Slavery and adopted related policies. The Board also challenged the Company’s own ESG position, given its focus on ESG initiatives for clients.

How stakeholder interests have influenced decision making

We define principal decisions as both those that are material to the group, but also those that are significant to any of our key stakeholder groups.
In making the following principal decisions the Board considered the outcome from its stakeholder engagement as well as the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company.

• Dividend

The Board reviewed the high level of cash and capital held by the Company in relation to its regulatory capital requirement, capital management policy and liquidity risk management framework as well as future requirements and potential risks identified in the ICAAP. After due consideration, the directors decided to exercise their discretion and return some of the cash to the parent by paying interim dividends of £91m and £14.9m. After payment of the dividends the Company retains sufficient capital and liquidity to meet its requirements, plus a buffer in line with its risk appetite.
The Company’s Pillar 3 disclosure allows the Company’s stakeholders and other market participants to understand the Company’s capital and liquidity adequacy, particular risk exposures and risk management process.

• Branch transfers

The Company concluded its transfer of the operations of its sales and distribution branches in Amsterdam, Brussels and Milan to newly established corresponding branches under its Irish affiliate SSGA Ireland Limited. This decision reflected the consideration of the EU clients’ needs in a post-Brexit environment, allowing clients to continue to be serviced by a Group entity authorised & regulated in the EU.

By order of the board,

Date 24 April 2020