LEADERS UNIVERSE SUSTAINABLE EQUITY

Storebrand Asset Management is a leading player in the Nordic market and a pioneer within the field of sustainable investments. We have been at the forefront of sustainable investing since the mid-1990s and are one of the founding signatories of the PRI.

We fundamentally regard sustainability as a significant driver of corporate value i.e., companies that manage current and future environmental and social opportunities and risks will emerge as leaders and are more likely to create a competitive advantage and long-term stakeholder value.

Sustainability is integral to Storebrand Asset Management, this means we evaluate economic, social and environmental aspects before we make any decisions. Our long-term vision for the year 2050 is a world where all people live well, and within the earth’s natural limits. Our standard for sustainable investments is based on the assumption that the companies which contribute to solving society’s problems in a sustainable way will also be the most profitable in the long run. Storebrand was the first Norwegian company to establish a sustainable investment department in 1995, and we have one of the most experienced environmental, social and governance (ESG) teams in the Nordic region. Since 2010, ESG analysis has been steadily integrated into the daily risk management and company/asset selection processes of Storebrand Asset Management’s fund managers.

Storebrand Asset Management’s sustainable investment strategy includes three distinct dimensions that are continuously evaluated and developed to remain in the forefront of sustainable investing. Our three dimensions include risk reduction through exclusions, selection of top performers through a sustainability score and lastly exertion of influence through active ownership.

Sands Capital considers environmental and social issues along with traditional financial measures to comprehensively evaluate an investment’s value, risk, and return potential. Poor practices or negligent oversight of ESG issues can pose significant financial, legal, and reputational risks. We research each issue from the bottom up and then evaluate its impact on our fundamental investment case. Input from research reports from external proxy advisors, company filings and sustainability reports, research from other investors, non-governmental organizations, and the Sands Research Team drive our votes on proposals about environmental or social issues.

Mackenzie Financial Corporation was founded in 1967 and has been managing money for institutional clients for over 45 years. Mackenzie provides investment management and related services through diversified investment solutions relying on proprietary investment research and experienced investment professionals to deliver various product offerings. With $166 billion USD in assets under management as of December 31, 2022 Mackenzie distributes its investment services through industry channels to both retail and institutional investors.

Our firm aspires to be a more purposeful organization by creating a more invested world; we believe that our role as an asset manager can have a significant effect in protecting and creating value for our stakeholders – our clients, our employees, our shareholders, our partners, our communities, and our planet – and as such, we have adopted a set of principles:

• We prioritize creating value for our clients by achieving long-term risk-adjusted returns across a diversified investment platform
• We mandate our investment boutiques to integrate factors material to risk and return – this includes environmental, social, and governance (ESG) factors. We believe that material ESG factors present financial risks and opportunities
• As long-term investors and stewards of capital, we believe in company engagement and proxy voting to promote good governance and management of material ESG issue
• We offer sustainable, thematic, and impact solutions that generate returns alongside impact for clients that want to align their values to their investments
• We believe that good corporate governance is a signal of quality management and that well-managed companies produce long-term, sustainable returns
• We believe that climate related risks present physical and transitions risks that have a direct impact on the value that we are able to generate for our clients
• We advocate for diverse, equitable and inclusive companies that respect the rights of all humans and prioritize the best interests of their employees, clients and communities

Visit Sustainable Investing | Mackenzie Investments for more information and our thought leadership.

Founded in 1924, MFS is a global, active investment manager guided by a single purpose: to create value by allocating capital responsibly for clients. Through a powerful investment platform, MFS combines collective expertise, thoughtful risk management and long-term discipline to uncover what we believe are the best investment opportunities in the market.

At MFS, the term sustainable investing encompasses our ESG integration processes, proxy voting activity and issuer engagements. We believe that owning and engaging with companies to improve their ESG performance can sometimes be a more effective path to positive outcomes for all stakeholders than exclusion and divestment.

Our investment teams rely on deep fundamental research and a long-term perspective to select securities that can produce sustainable returns throughout an economic cycle. Although our overall approach to investing has always been well aligned with a sustainability-oriented mindset, in 2009 we formed the MFS Responsible Investing Committee to ensure that financially material ESG topics were being systematically integrated into our equity and fixed income investment processes. We believe collaboration results in better insights, which is why our investment team has always been integrated across asset classes. As a result of that long-held belief, our ESG analysts are expected to drive collaboration on sustainability-related topics, not create an internal ESG outsourcing group. For us, integration means each of our analysts and portfolio managers are considering these topics throughout the entire investment decision-making process.

Visit www.mfs.com/sustainability for more information including ESG videos and thought leadership.

Calvert Research and Management (Calvert) is a leader in ESG and traces its roots to Calvert Investment Management which was formed in 1976 and was a founding signatory to the UN PRI in 2006. Calvert launched its first responsible investment strategy in 1982 that divested from companies doing business in apartheid-era South Africa. Calvert is a signatory to multiple ESG initiatives and notably, the Calvert Women’s Principles were also adopted as the UN Women’s Empowerment Principles.

Calvert’s philosophy is to invest in companies that demonstrate positive environmental, social and governance (ESG) performance as we address corporate responsibility and sustainability challenges. Calvert believes that there are long-term societal and financial benefits to an investment philosophy that attaches material weight to these factors.

Our in-house ESG research team are guided by the proprietary Calvert Principles towards the goal of earning competitive investment returns for clients while influencing progress and creating a positive impact on society. Research focuses on identifying the financially material ESG risks to which issuers are exposed, evaluating management teams’ ability to navigate those risks, and recognising opportunities for companies to improve their ESG performance.  Analysts parse thousands of ever-evolving data points to differentiate issuers based on financially material ESG issues, informing both our investment decisions and our corporate engagement efforts.

Calvert has a long history of advocacy and engagement. Engagement at Calvert consists of direct dialogue with company leadership, proxy voting, filing shareholder resolutions, working with other investors in multi-stakeholder engagements, and working with legislative and regulatory authorities. We believe that making improvements on material ESG issues may not only promote positive change, but also drive shareholder value.

Calvert was launched as an affiliate manager of Eaton Vance Corp. at the end of 2016.

We believe that the privilege of investing our clients’ capital carries with it a responsibility to try to secure a sustainable future. We aim to help our clients make a positive difference to people and the planet while delivering long-term investment returns. We do so through a robust and comprehensive integration of sustainability considerations into our investment platforms.

With our roots in Africa, we know that well-directed investment can transform lives for the better. For over a decade, we have been investing in economic development in Africa, mobilising finance to bring health and prosperity to some of the continent’s poorest communities. We also care deeply about preserving the natural world. As well as investing sustainably, we support initiatives to conserve wildlife.

Our commitment to sustainability extends beyond integrating it into the way we invest. We also aim to act sustainably in our engagement with clients, communities and other stakeholders — and in the way we inhabit our own environment.

Our investment platform incorporates environmental, social and governance factors as we believe this should enhance long-term performance. By incorporating ESG factors, our strategies consider the full spectrum of risks and opportunities associated with an investment. We believe strongly in the power of engagement to effect positive change.

We are committed to pushing the frontiers of sustainable investing, striving to improve our ability to assess ESG impacts on portfolio holdings and their potential to influence returns. For example, in 2019 WWF and Ninety One joined forces to assess the use of geo-spatial research to measure environmental risk in sovereign debt portfolios – something which later saw the release of our Climate & Nature Sovereign Index – both facilitating engagement with governments to encourage fiscal agendas that serve people and the planet.

Please find further information about Ninety One on our website, www.ninetyone.com

We have an integrated approach to responsible investment and ESG research that is embedded within our investment approach, and is supported by our culture of collaboration, sharing of research and ideas, and robust debate. In developing our understanding of a business we take into account its approach to managing environmental, social and governance issues, as well as any controversies that may have arisen.

In 2018 we launched a proprietary and innovative responsible investment (RI) ratings system that combines an assessment of a company’s financial stewardship with an analysis of how well it manages its material ESG risks (using the SASB framework). Combining both aspects into a single, forward-looking company rating from 1 ( strong) to 5 (weak), reflects our conviction that prudent management of financial and ESG factors is important to a company’s ability to create long-term, sustainable value. Utilising data science and cloud computing, the RI analytics and ratings add to our fundamental research, providing our global investment teams with a more robust and evidence based RI capability, with coverage across 5,500 global listed equities.

Over the last 30 years, we have built a comprehensive responsible investment approach consisting of three pillars:

• ESG integration
  Incorporating financially material ESG factors into the investment decision-making process to help mitigate risk and potentially uncover opportunities.
• Active ownership
  Addressing ESG issues by actively engaging with issuers and investee companies and exercising shareholder rights.
• Solutions
  Providing focused responsible investment strategies including exclusions, best-in-class ESG, sustainability-themed and impact investments.

 Our research framework:

ESG factors are systematically integrated into our bottom-up research process for fixed income and equity issuers. We aim to develop our own holistic house view of issuers’ ESG profiles. By integrating ESG considerations with economic factors, and drawing from specialized ESG research sources, the research teams seek to identify financially material ESG factors and arrive at an independent, comprehensive view of the investment.

We seek to answer three key questions:

• What are the potential economic impact of the ESG issue and its associated effect on the issuer’s long-term growth potential, profitability or creditworthiness?
• Are ESG risks and opportunities accurately reflected in valuations?
• Is engagement beneficial to generate long-term economic value?

We view ESG analysis as a risk management tool and a potential alpha source. By integrating ESG factors into the traditional financial analysis framework, we aim to identify financially material factors which could affect the issuer’s long-term growth potential, profitability, or creditworthiness, and to assess if they are appropriately priced.

Our ESG integration process focuses on managing financial risks and identifying opportunities by including additional information in investment analysis to help inform our decision making. ESG integration does not seek to make ethical judgements and imposes no ESG-related restrictions on the investment universe. It seeks to systematically uncover ESG risks and opportunities to ensure they are appropriately priced in the investment being considered.

For further details please download our Responsible Investment Report 2020 here.

Responsible Investing lies at the heart of NN Investment Partners’ investment beliefs. We started to manage our first sustainable equity strategy more than 20 years ago, which have been able to show consistent outperformance throughout the full market cycle. It proved resilient during the financial crisis in 2008 and also held up well in the first quarter of 2020, outperforming its traditional counterparts, as the impact of the coronavirus hit markets.

At the core of our investment philosophy is the underlying belief that sustainable companies perform better in the long term. In our view, long-term winning companies are ones that are able to sustainably create value through providing sustainable solutions, exhibiting sustainable behaviour and
possessing a sustainable competitive position. We strongly believe that societal and financial returns can be achieved simultaneously and that both factors reinforce each other.

NN (L) Global Equity Impact Opportunities philosophy demonstrates that societal and financial returns can be achieved simultaneously and that both factors reinforce each other. For us, both types of re-turns are equally important. The best (managed) companies take a holistic view to value creation, including their impact on broader society. And companies that provide valuable solutions for society are more likely to get paid.
We aim to exploit mispriced externalities and invest along the Sustainable Development Goals (SDG’s). By doing so, we are positioned for growth, optimize potential impact, and minimize sensitivity to in-creasing internalization of social and environmental costs.

ClearBridge believes that ESG is the future of investing and that someday it won’t even be called “ESG” or designated as a separate discipline; it will become an integral part of the way investors analyze companies. At ClearBridge, ESG is not merely a screen or an overlay; it is part of how we conduct fundamental research and it defines how we think about all companies considered for investment in all client portfolios. Our clients, whether or not they desire an explicit ESG mandate, all have investment goals — growing pensions, funding grants or delivering retirement income  — to be achieved far into the future. They deserve to invest in companies that plan carefully for what’s ahead and that care about the environment, their employees, their customers and their community. We believe such companies are most likely to provide the kind of performance our clients need to meet their long-term goals.

ESG Approach

ClearBridge’s tradition of long-term investing in quality businesses aligns closely with an ESG investing approach. This approach fosters meaningful ownership positions in portfolio companies and significantly lower portfolio turnover compared to peers. This long-term approach is reflected in the Firm’s compensation structure, which bases incentive compensation for portfolio managers primarily on three- and five-year investment performance. A portion of portfolio managers’ compensation is invested in the portfolios they manage and vests over four years. These practices align the incentives of our portfolio managers with the long-term interests of our clients.

Our bottom-up, fundamental research targets companies with:

• Differentiated business models
• High sustainable returns
• Strong financial characteristics
• Seasoned management teams

This overall stock selection process lends itself well to ESG integration. Rather than rely on negative screening or overlays, ESG integration ensures a more holistic approach to sustainability that measures progress and promotes improvement over time.

ClearBridge ESG portfolios do not simply avoid certain industries; we integrate industry-specific ESG factors into our fundamental research process and favor companies that promote best practices on ESG issues. All companies considered for investment across the platform are given an ESG rating, updated at least annually, and only companies rated “A” or better may be included in ESG portfolios. We also work actively with companies seeking to improve their ESG performance through direct engagement and proxy voting.

ESG Integration and Ratings

At ClearBridge, ESG is not merely a screen or an overlay; it is how we conduct fundamental research and defines how we think about all companies considered for investment. Many investors say they integrate ESG into their investment process, but there are many different approaches being employed. When we say our ESG research is “integrated” we mean that it is included in an analyst’s process for covering a company. This is a key point — ESG research is not done by separate analysts or simply as an overlay of research from a third party.

Simply stated: Brown Advisory believes that sustainable investing is smart investing. Investors have historically had to choose between investing according to their values and attractive performance. Brown Advisory fundamentally disagrees that there is a trade-off: investors can have both and may be able to achieve better results through sustainable investing.

We believe ESG information is useful for more than aligning investment choices with a client’s values; we have found that this information can be extremely helpful in identifying company-specific risks and in highlighting drivers of a company’s future growth that may not be readily apparent through traditional research. We believe that using ESG research to supplement our fundamental due diligence on a company can help us make better investment decisions. And because our ESG research helps us look at companies from a different angle than most other investors, we believe our efforts can provide us with an informational advantage.

Our approach to ESG research is consistent with our approach to research in general: we seek to gather relevant data from secondary sources, combine it with our own primary research and interviews, and synthesize all of this information in a manner that is useful for investment decisions.

We believe that our research efforts have helped us gain a voice in the broader sustainable investing conversation occurring across our industry. Most importantly, we believe that these additional layers of ESG research give us a powerful foundation for steering capital toward stronger, more robust companies that are built to last.

LGT Capital Partners is a leading alternative investment specialist with over USD 60 billion in assets under management and more than 550 institutional clients in 39 countries. Headquartered in Pfaeffikon (SZ), Switzerland, the firm has offices in New York, Dublin, London, Paris, Vaduz, Dubai, Beijing, Hong Kong, Tokyo and Sydney. An international team of over 550 professionals is responsible for managing a wide range of investment programs focusing on private markets, liquid alternatives and multi-asset class solutions. Since 2003, LGT Capital Partners has been encouraging the integration of ESG in its offering and its promotion in the financial industry. In 2008, the firm was one of the first signatories of the UN PRI. Moreover, since 2018 LGT Capital Partners engages with PRI as a member of its Board. Our sustainable approach forms a key part of our corporate culture and is clearly reflected in our investment activities.

LGT Capital Partners has for a long time adopted a sustainable investment approach. We integrate principles of sustainability into a variety of asset classes and investment structures. Consideration of ESG (environmental, social and governance) factors are applied in the area of alternative investments, equities and bonds, fund of funds solutions and direct investment solutions based on a process tailored to the asset class.

In terms of investment products, our global investment universe excludes companies involved in the production, storage and supply of controversial weapons such as nuclear weapons, land mines, cluster bombs/munitions and biological and chemical weapons as well as companies involved in thermal coal production and power generation from thermal coal.

ESG Report 2020

For what is already the eighth time, the annual ESG Report from LGT Capital Partners shows how LGT’s portfolio managers incorporate sustainability factors into their investment processes.

Read the entire ESG Report 2020 (PDF) online.

Sustainability is our lens for the viability of our investments. Thus, we believe

• that long-term thinking is the main condition for real and lasting economic success
• in investing in businesses that provide the right solutions for the future, while avoiding companies that fail to address future challenges
• that incorporating a sustainability mind-set at all times increases the quality of our analysis and raises the level of our insights
• that integrating all aspects of sustainability into the investment process leads to better outcomes by reducing risks and harnessing long-term opportunities.

The ESG analysis of companies is based on a proprietary assessment methodology developed by the Sustainable Investment Research team of the Bank. All ratings are conducted by in-house sustainability analysts (using aggregated sustainability data from renowned third-party providers). The sustainability rating incorporates two dimensions, which are combined in the Sarasin Sustainability-Matrix®: a Sector Rating (comparative assessment of industries based upon their impacts on environment and society) and a Company Rating (comparative assessment of companies within their industry based upon their performance in managing their ESG risks and opportunities). Only companies with a sufficiently high combined rating qualify for the Bank’s sustainability funds.

BNP Paribas Asset Management (BNPP AM) is BNP Paribas Group’s dedicated asset management arm. It has EUR 488bn assets under management and around 3000 staff in 30 countries.

In a fast changing world, our aim is to achieve long-term sustainable returns for our clients by placing sustainability at the heart of its strategy and investment decision-making.

BNP Paribas Asset Management’s investment approach to sustainability began in 2002 with the launch of our first sustainable fund and the creation of our dedicated environmental, social and governance (ESG) research team – the precursor of our Sustainability Centre. In 2006, we were a founding signatory to the UN-supported Principles for Responsible Investment (PRI). Since then, we have continued to strengthen our commitments.

Our sustainability expertise is driven by the Sustainability Centre (around 30 experts).

Our ‘Global Sustainability Strategy’ (GSS) details our sustainable approach, setting clear objectives and commitments, and focusing on three key sustainability themes: Energy transition, Environmental sustainability and Equality and inclusive growth (the ‘3Es’).

Our firm wide sustainable approach is based on 6 pillars:

1. ESG* Integration
2. Stewardship
3. Responsible Business Conduct (“RBC”)
4. Forward-looking perspective (the ‘”3Es”)
5. CSR** – Walking the Talk

It reinforces our commitment to invest for the long-term, engage with companies and regulators to promote best practice, and raise awareness of the role that finance can play in achieving a sustainable world.

We report on our approach annually in our sustainability report available here.

ESG Overview

American Century Investments focuses on delivering superior, long-term risk-adjusted performance to clients worldwide. The decision to invest with us also enables our clients to make a meaningful impact by funding medical research dedicated to defeating life-threatening diseases.

Over 40% of American Century’s profits are paid to our controlling owner, the Stowers Institute for Medical Research, a world-class biomedical research organization. Since 2000, American Century’s dividend payments funding the institute’s work have totalled $1.7 billion.

With sustainable investing firmly rooted in our culture, American Century Investments’ views on ESG factors are integral to our corporate citizenship and business model.

“Sustainability isn’t just something we practice; it is part of who we are as a company and as global citizens,” said Jonathan Thomas, American Century president and chief executive officer. “With an ownership structure that directs over 40% of its profits to fund medical research, we attract employees motivated to make a difference and develop investment teams who make Environmental, Social, and Governance (ESG) criteria a fundamental part of their analysis.”

As active managers, we believe integrating material ESG factors into fundamental analysis contributes to better investment decisions. We view ESG issues as important inputs into fundamental analysis that can help mitigate downside risk or increase upside potential associated with ESG factors otherwise not captured by traditional financial analysis.

Our ESG integration process is guided by a three-layer analytical framework that is aligned with our fundamental analysis process and fiduciary duty. This overarching framework is applied to equity and fixed income strategies and seeks to 1) identify macro-level ESG issues impacting market dynamics, 2) determine which of these issues are relevant at the sector level, and 3) evaluate ESG materiality at the issuer level. As long-term investors, actively engaging with our investee companies and voting shares in the best interest of clients are integral components of our investment process and commitment to serving clients.

ESG Commentary from Victor Zhang, CIO

Our ESG integration approach is an evolution of how we invest, an extension of our relentless pursuit of client success. We believe that integrating material ESG factors into fundamental analysis contributes to better investment decisions. For more than a decade, we have incorporated ESG considerations into client portfolios.  Over time, we have steadily expanded our ESG knowledge and resources, developed proprietary research tools and enhanced our investing capabilities.

Clients are the heart of who we are, and we proudly position our ESG program as client-focused and solutions-driven. While American Century emphasises ESG integration across our investment strategies, we fully appreciate the importance of delivering customised solutions so that clients may achieve their ESG investing and sustainable outcome objectives. We have extensive experience working with clients to design ESG solutions—ranging from screening and best-in-class tilting, to thematic and impact investing.

“Sustainable investing remains a strategic focus and firmwide commitment, and we will continue to add resources and adapt processes to optimally support this initiative,” says Chief Investment Officer Victor Zhang.

American Century Investments and Global Fund Search are not affiliated investment companies.

The vast majority of American Century’s investment strategies are subject to the incorporation of ESG considerations into the investment process employed by each strategy’s portfolio managers.  When portfolio managers incorporate Environmental, Social and Governance (ESG) factors into an investment strategy, they consider those issues not captured by traditional financial analysis. When selecting investments, portfolio managers incorporate ESG factors into the portfolio’s existing asset class, time horizon, and objectives. Therefore, ESG factors may limit the investment opportunities available, and the portfolio may perform differently than those that do not incorporate ESG factors. Portfolio managers have ultimate discretion in how ESG issues may impact a portfolio’s holdings, and depending on their analysis, investment decisions may not be affected by ESG considerations.

American Century Investment Management (UK) Limited is authorised and regulated by the Financial Conduct Authority. American Century Investment Management (UK) Limited is registered in England and Wales. Registered number: 06520426. Registered office: 12 Henrietta Street, 4th Floor, London, WC2E 8LH.

American Century Investments (EU) GmbH is registered with the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)). American Century Investment Management, Inc. is not authorised by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)).

©2022 American Century Proprietary Holdings, Inc. All rights reserved.

ESG factors are among the many drivers considered by FI’s IPC and Analysts throughout the investment process.

FI monitors key social policies driving wealth creation and economic growth, including infrastructure investment, tax policy, free trade, property rights, government reform, and social factors. Political factors affecting these social policies are integral to top-down analysis (election cycles/legislative gridlock), while maintaining regulatory risk awareness. Environmental factors frequently influence FI’s macro-economic research. FI monitors advancing energy efficiency, especially within Industrial/Technology companies, nuclear power risks, resource extraction implications (labour strikes/resource nationalisation) and litigation risk tied to environmental impact, among other factors. These ESG factors are incorporated into the sector weight preferences as well as individual security selection.

FI routinely evaluate governance issues and off-balance-sheet risks during security selection. These include consideration of company auditors’, whether opinions are qualified or have potential conflicts of interest, shareholder concentration, regulatory filings reviews, and reviews of news flows for ESG concerns.

FI then performs qualitative, fundamental research on prospective investments identifying securities with strategic attributes consistent with FI’s top-down views and with competitive advantages relative to their peer group. This research process involves reviewing and evaluating ESG factors prior to purchasing a security to identify securities benefitting from ESG trends. These factors include corporate stewardship, environmental opportunities/liabilities and human/labour rights controversies.

At Van Lanschot Kempen it is our mission to create and preserve wealth for our clients and for society in a sustainable way. As such, we take our role as an active investor very seriously. We leverage our influence on sustainability across the value chain; working with clients, managers and companies, to help them achieve both financial returns and sustainable impacts. In every aspect of our business, our commitment is simple: we focus on delivering stable outperformance in the long run with sustainability criteria fully incorporated into everything we do. We take a highly selective approach and strive to combine this with a collaborative decision-making approach.

In 2020, Van Lanschot Kempen showed global leadership with our new Climate Policy, through which we have become one of the first asset managers to commit to becoming a net-zero investor by 2050. Our policy also sets short-term objectives to align all of our listed investments with Paris Agreement pathways by 2025.

We have spent years refining our responsible and sustainable investment philosophy and processes to help our clients preserve and grow assets that yield a real economic return alongside a positive societal and environmental impact. We organise our responsible investment efforts across four pillars: Exclusion and Avoidance, ESG Integration, Active Ownership, and Positive Impact. Through our engagements, we seek to encourage positive change at companies. We engage on a broad range of strategic, financial, corporate governance, environmental and social topics.

Wellington Management is one of the largest independent investment management firms in the world, serving as a trusted adviser for institutions in over 60 countries. Our innovative investment solutions are built on the strength of rigorous, proprietary research and span nearly all sectors of the global securities markets. As a private firm whose sole business is investment management, our long-term view and interests are aligned with those of our clients. And to better assess risks and opportunities in client portfolios, we have integrated the analysis of environmental, social, and corporate governance (ESG) factors into our investment and risk-management processes firmwide. Our dedicated ESG team provides our investors with proprietary research and insight to support ESG considerations, incorporating analytics, company engagement, and in-depth portfolio reviews. Wellington has entered into a collaborative initiative with the Woodwell Climate Research Center (Woodwell) — the world’s leading independent climate research institute — to integrate climate science and asset management. Our new alliance will focus on creating quantitative models to help analyze and better understand how and where climate change may impact global capital markets. A broad range of projects is planned, including developing investor tools and innovative analytical methods seeking to improve climate risk assessment and investment outcomes.

Learn more about sustainable investing at our firm: www.wellington.com/en/sustainable-investing/

At the heart of our philosophy is the principle of stewardship – careful, considered and responsible management of our clients’ funds in accordance with our Hippocratic Oath. This philosophy has stood the test of time since its origins in 1988. We only invest in high-quality companies that contribute to, and benefit from, sustainable development. This means that companies with material exposure to harmful or controversial products and services are naturally avoided. Investing in companies that fail to discharge their environmental stewardship and human rights responsibilities is also inconsistent with our philosophy. The stewardship of a company is a fundamental element in our assessment of quality. ESG issues, ethical conduct and integrity of stewards are key considerations when assessing the quality of management.

Our consideration of sustainability is holistic; it includes ESG but is more than ESG. We consider financial sustainability – conservatism around the balance sheet, for example – and stewardship by management – the treatment of all stakeholders through a crisis, for example – to be as essential to the sustainability positioning of a company as the product or service the company sells.
We avoid companies that have products and services that do not contribute to sustainable development and we engage with companies to improve sustainability outcomes. This leads us to seek out companies with exceptional cultures, run by responsible stewards, where the products, services and operations help reduce ecological footprints or solve environmental problems, or advance human development, or both.

Fidelity International’s vision is to deliver innovative client solutions for a better future. Sustainable investing, which factors in Environmental, Social and Governance (ESG) performance, is therefore an integral part of approach as a company that focuses on long-term sustainable outcomes.

Fidelity has developed a proprietary sustainability rating leveraging our internal research and interactions with issuers. The proprietary sustainability rating is based on the following principles:

Focusing on material issues

The rating focuses on 5 to 10 material ESG issues for 99 different subsectors. The list of ESG issues has been selected by the Sustainable Investing Team and the analysts based on their relevance, materiality and forward-looking nature.

Leveraging internal research capabilities

Analysts have access to a variety of sources of information to evaluate the ESG risks and opportunities of issuers under their coverage. Equity and fixed income analysts work together to rate and provide a qualitative comment on each ESG issue.

When rating companies, analysts consider the following components:

1. Awareness: Is the company aware of its material risks? Are commitments to address these risks institutionalized across its operations?
2. Action: How well does the company implement its policies to address key risks/take advantage of opportunities?
3. Results: How effective are the company’s policies and programs in practice? Has the company been subject to significant controversies?

Analysts then assign an overall A to E rating (C being understood as the sector average) for each rated name on a sector relative basis. Whilst an equally-weighted average of the issue-level ratings is automatically provided, analysts have the discretion to override the overall rating if they consider that one issue may be more prevalent for a company.

Providing a forward-looking assessment 

The rating is designed to generate a forward-looking and holistic assessment of ESG risks and opportunities. Analysts qualify the direction of change of companies’ ESG performance (positive, neutral or negative trajectory).

Incorporating engagement insights

Where the information is not available due to a lack of disclosure, analysts are encouraged to contact the company and ask questions about these issues to complete their assessments. Our analysts conduct about 15,000 company meetings a year and regularly use these meetings to gain information about companies’ ESG management.

Fidelity has developed an ‘ESG Rating App’ available to the investment team on our internal research system Insight. Analysts use the ESG Rating App to populate the ratings and record their commentaries. They can also flag companies they consider as good candidates for engagement. Names rated below C are automatically flagged for our Sustainable Investing Team to follow up with the company.

Visit www.fidelity.lu/sustainable-investing for more information including our ESG proprietary rating video.